BOSSES thinking of closing a solvent business are being advised to act promptly in case a tax break is taken away.

It has been suggested that chancellor Rishi Sunak could reduce Business Asset Disposal Relief (BADR) – formerly known as Entrepreneurs’ Relief – in the budget this month.

Clive Fortis, director at the Bournemouth office of insolvency practitioner Antony Batty and Company, said: “If BADR is scrapped, or the benefit is reduced, then directors looking to close their solvent companies through the use of a members’ voluntary liquidation would not benefit from the current reduced rate of Capital Gains Tax, which has saved many thousands of pounds.”

The company says it has seen a rise in members’ voluntary liquidations during the pandemic.

It says directors who have worked hard to keep their companies solvent have decided they would prefer to liquidate the business, take out their money and move onto something else or retire.

BADR reduces Capital Gains Tax on the sale of a company or its assets from the standard rate of 20 per cent to 10 per cent for qualifying gains.

There has been speculation in ahead of a succession of recent budgets that the relief would be scrapped. In the March 2020 budget, it was capped at a lifetime limit of £1million. The current potential maximum tax saving is £100,000.

After the huge amount the government has borrowed to fund Covid, it has been speculated that the abolition of the relief could save the Treasury around £2.5billion a year.

Only a licensed insolvency practitioner can be appointed as a liquidator for a members’ voluntary liquidation.

Rishi Sunak will deliver the autumn budget on Wednesday, October 27.