Surge in demand for individuals and businesses looking to beat Chancellor’s budget – London Business News

Nervous about potential tax changes expected to be announced in next week’s Budget has led to a surge in legal guidance, according to leading London lawyer Thackray Williams.

In some departments, the number of requests has increased by 200% compared to the same period last year.

Professional landlords and businesses are rushing to liquidate assets ahead of a potential rise in capital gains tax (CGT), concerns over rising inheritance tax are prompting a rethink of investment strategies, while corporate and commercial teams rush to close deals, with some clients resorting to litigation to speed up the process.

There is increased activity across the board, with the private equity, real estate, trade and retail, and hospitality and leisure sectors seeing an increase in instructions from clients wishing to transfer and liquidate assets and complete transactions, driven by concerns about the impact of the measures. The Chancellor is expected to announce this on October 30.

“Over the last couple of months we have seen an increase of over 200% in inquiries from clients seeking tax advice, particularly regarding the ability to transfer assets in their own name to take advantage of current capital gains tax (CGT) rates. says Elliott Lewis, who has headed the private client department since 2014.

“It has been widely predicted that Rachel Reeves will increase capital gains tax, possibly from its current rates, which range from 10-28% to as much as 39%. This has caused huge concern and led to clients considering bringing forward asset transfer plans to crystallize gains at a lower tax rate,” he explains.

This directly contributes to more work in the real estate sector. “Over the last three months we have seen a 50% increase in instructions compared to the same period last year,” comments sector head Vikki Herbert. “We also have a number of deals with a maturity of 29^th October”.

“The suggestion that pension pots may be subject to Inheritance Tax (IHT) is also prompting people to seek advice on whether they need to rethink their investment strategies,” adds head of private wealth Anthony Macey.

An increase in the number of requests and instructions is similarly observed in the corporate and commercial departments of the firm. “We have a significant number of businesses that have had deals done under relaxed deadlines and are now scrambling to complete them before any tax changes are announced,” explains their chief executive Nick Gabay. “We are also seeing a sharp increase in management buybacks and corporate restructurings resulting in share sales.”

Lewis Glasson, a partner in the firm’s litigation department, says: “We have even seen some clients resort to litigation to try to speed up transactions, for example where a minority shareholder sues a majority shareholder and tries to force the sale of his shares by aggressive threats of litigation.” .

The urgent need to complete transactions is seen in the retail, hospitality and leisure sectors. “A significant portion of the mergers and acquisitions we are involved in are scheduled to be completed within 30 years.^th October, while businesses with properties for sale are also trying to go over budget,” says sector head Amit Bhangham.

The increase in guidance highlights the need for long-term strategic investment and tax planning, suggests Anthony Macey: “We can predict that governments, taxes and legislation will change. Therefore, it is advisable to have a wealth and tax management strategy that spreads your exposure across different types of investments to reduce your exposure to any tax change.

“Ideally, you should plan your personal and business investments and intergenerational wealth management with experts from the beginning. But if, like most people, you’ve grown your investments naturally and now find yourself highly exposed to potential changes to CGT or IHT, you should still take expert advice to understand all your options before making decisions that could have serious consequences “

Can you beat the expected capital gains tax hike?

Vikki Herbert, head of property at Thackray Willams, said: “Whether you can beat any increase in capital gains tax will depend largely on when any increase comes into force. If Rachel Reeves announces an immediate increase, unless you have sold and completed the sale of your property no later than 29^th In October you will be subject to the new rate.

“Delayed implementation may create an obvious window to complete sales while current rates apply. However, with many property investors nervous about the implications of lease reform and the rights of new tenants, the increase in CGT may well speed up decisions to divest.

“There is therefore a strong possibility that there will be a glut of properties in the market as landlords and commercial property owners attempt to complete sales before any future increases. As we’ve seen with the real estate boom during the pandemic, this can create bottlenecks that may still prevent an ambitious project from being completed on time.

“Therefore, the best way to manage any real estate portfolio is to have a strategic investment plan for the long term, rather than reacting to one-off legislative and tax changes.”

Elliot Lewis, head of private clients at Thackray Williams, said: “The challenge with any last-minute tax planning is always making sure you’re doing it for the right reasons and that you fully understand the implications of transferring assets between countries. .

“There is a fairly common misconception that if you transfer an asset that was an investment as a gift (i.e. no cash) it will not give rise to any capital gains tax (CGT) liability. Unfortunately this is not true; a gift is treated as a disposal for CGT in the same way as a sale. However, unlike a sale, you do not have the money to pay the CGT bill as soon as it arises.

“We are looking at several options for clients. If the amount reaches the maximum of £325,000 per person (ie £650,000 for a couple), you may want to consider transferring the assets into a trust or trust for each person. A transfer into a trust is an Inheritance Tax (IHT) event, but if you contribute no more than your £325,000 IHT allowance then tax is charged at 0% so you won’t have to pay anything.

“As this is a fee-based transfer, you may qualify for CGT withholding relief, meaning the asset is transferred to the trust along with the profits. But it is important to understand that you are not solving the CGT problem, you are simply postponing it to a later date.

“Another option is to consider transferring assets that do not give rise to CGT, such as your main home. This is generally not recommended, but if you have another property that has built-in income that you are willing to live in, then you may want to consider donating your primary residence or selling it and gifting the money. This won’t work for the vast majority of people, but in certain circumstances it may be an option.

“But whatever you’re considering, it’s important to take personalized advice. Everyone’s circumstances are different and tax decisions are very personal, so it’s vital to have personalized advice.

“Whatever you do, don’t take advice from those who are not qualified – too often we have to help clients who are suddenly faced with large tax bills because they took unofficial “advice” that turned out to be incorrect. and very expensive.”