Tax rates are set to increase on disposals made using MVLs from April 2026. The current rate of 14% (where qualifying for Business Asset Disposal Relief) will increase to 18%. Click to see further details.
With the Autumn Budget announced for 26th November, we think back to a measure that was announced in the 2024 Budget. Often these things are forgotten, especially with the amount of news coverage the economy and the Chancellor's work attracts - quietly sat within legislation are tax changes marked for future dates.
A reminder of one such impending change is the further tax rate increase affecting Members Voluntary Liquidations (‘MVLs’). For those not au-fait with the process, when a business owner sells or winds up their solvent company using an MVL, they may be eligible for Business Asset Disposal Relief (‘BADR’), providing a more lucrative tax rate than standard capital gains.
The rate increased from 10% to 14% from April 2025 and will increase further to 18% from April 2026.
Business owners closing their companies via an MVL after 6th April 2026 will therefore face higher tax rates than currently.
Actions - for any business owners currently considering an MVL, it would be advisable to progress this asap if they wish to try and take advantage of the current 14% BADR rate. As always, the advice of a trusted accountant/tax advisor is the best first step.