Research shows companies remain cautious as senior Labor Party officials have voiced support for higher capital gains taxes. Credit: Christopher Furlong/Getty Images
Fear of tax raids following the next general election has prompted some business owners to accelerate their sell-off plans, according to a new survey.
Two-thirds of UK business owners with a turnover of at least £5m Sterling are preparing plans to exit their company, according to a study by management company Evelyn Partners.
Two in five business owners surveyed plan to sell or wind down According to a survey of 508 respondents, they will downsize their business over the next year.
Nearly one in four business owners said they accelerated such plans in the past year, according to the survey.
Fear of a change of government and a potential tax increase was the most common reason for those who accelerated plans to sell or wind down their business, as indicated by 26% of respondents.
According to Tom Shave, a partner at Evelyn Partners, the high figure reflects widespread concern among firms about the tax changes a future Labor government is considering.
1603 Business Investment Falls tax changes, such as an increase in the capital gains tax rate,” said Mr. Shave.
The poll deals a blow to Labor leader Keir Starmer and Shadow Chancellor Rachel Reeves, who have attempted charm to win back confidence among business leaders.
Ms Reeves tried to reassure businesses that she had “no plans” to raise capital gains taxes.
But the study shows that firms remain wary of senior Labor figures parties. expressed support for the increase.
Deputy Leader Angela Rayner has previously proposed aligning capital gains taxes with income tax so that an employee is taxed in the same way as a person selling shares or property.
1405 Comparison of Capital Gains Tax Rates (International)
This effectively at least double the rate paid on the sale of most assets to high net worth individuals.
Ms Rayner voiced her criticism after it emerged that Prime Minister Rishi Sunak paid 22 percent in taxes last year, since a significant part of his income comes from capital gains.
UK wages above £50,270 are taxed at 40%, rising to 45% for those earning over £125,140.
Gains from the sale of a second home or rental property are taxed at 28 percent, while sales of other assets such as stocks, businesses, and personal property such as jewelry are taxed at 20 percent percent.
A survey conducted by start-Consulting firm Beauhurst previously found that 85% of founders would consider moving their company overseas in the event of higher taxes.
Although fears of a change of government were the most frequently cited reason in the Evelyn Partners survey , business owners who plan to sell, also named a number of other factors.
Trouble accessing long-term capital or investments to keep their business viable was the second most frequently chosen reason, also cited by one in four owners planning to sell.
A similar proportion stated that a change in their personal circumstances meant they needed to gain access to cash related to their business.
Tax Burden
Many also cited red tape as a key factor, with nearly one in four respondents pointing to increased regulation and oversight of issues such as ESG and net zero.
However, more than one in three business owners said they had postponed their plans to leave the company.
Mr Shave said this is “probably driven by the current economic uncertainty and potential concerns that they may not get the best price for their business, as evidenced by the slowdown in M&A activity.”< /p> p>
Those who planned to leave their companies most often chose to turn their business into an employee-owned trust and then pass on to a family member or sell it to a buyer.
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