CCR Magazine

You are here  :Home arrow News arrow April tax change triggers record number of solvent liquidations
Contact Us Newsletter Signup RSS Feeds

Latest News Headlines


Commercial Credit News


April tax change triggers record number of solvent liquidations PDF Print E-mail
Wednesday, 18 May 2016
A record number of solvent companies were wound-up in March 2016 as company directors responded to a change to tax rules introduced at the beginning of April, according to research by insolvency trade body R3. 

There were 2,663 solvent liquidations in March, over two-and-a-half times more than the previous record of 992 in April 2015. The monthly average for the 12 months prior to March 2016 was 768.

As of the 6th of April, directors winding up a solvent company can no longer claim Entrepreneurs’ Relief from the Capital Gains Tax (CGT) due on any gains if they continue to work in the same trade as that company in the next two years.

The change was introduced to prevent individuals avoiding income tax by ‘storing up’ profits in one company, winding it up and paying a reduced rate of CGT before starting again with a new company.

Andrew Tate, R3 president says: “The scale of the spike in solvent liquidations is a surprise. We expected there to be an increase as the clock counted down, but not one as big as this.”

“There will have been a mixture of different types of companies being liquidated, including those companies owned by those targeted by the rule.”

“However, some genuine entrepreneurs may have had to accelerate their retirement plans to avoid being hit by the tax change.”

R3 has previously warned that the rule change may have unintended consequences for entrepreneurs approaching retirement who needed to wind-up their company.

Andrew Tate explains: “Very often, retiring entrepreneurs who are winding up their company but selling or passing on their business will have to stay involved for a while to make the handover easier. Their presence as a consultant might be reassuring for customers, for example.”

“Obviously, this means they have to stay involved in the same line of work within the two year timeframe.”

Entrepreneurs’ Relief on Capital Gains Tax sees the tax charged at 10% rather than the standard rate.

Numbers of solvent liquidations have been abnormally high since the very end of last year when the new rules were announced. Since the start of monthly records in March 2014, only five months have seen more than 900 solvent liquidations: December 2015-March 2016 accounted for four of these.

Solvent liquidations accounted for 66% of all liquidations in March, compared to an average of 35% over the previous two years.

 Forums International Ltd

Forums International Ltd

 Attendance at your first meeting is free of charge, and please quote reference 'CCR2016' to receive the special 10% discount off of your first annual subscription.

Find out more here.

latest issue

CCR Cover

The latest edition of CCR Magazine, the leading editorial publication in the UK credit industry, is out.

Read the latest issue online


CCR is the premier magazine for consumer and credit professionals. It provides an independent voice to the industry, breaking major news stories and running in-depth features.

As a magazine, it works with and campaigns on behalf of the credit industry to promote its importance as a centre of potential profit and business development to the wider business world.

Subscribe to CCR Magazine

CCR World Magazine


Providing information and analysis for thousands of senior credit professionals worldwide, every quarter.

Find out more

GTS Media Ltd
81 Cambridge Road

Registered in England No: 05483197