Sam’s Stance – The Long-Awaited 2021 Spring Budget

March 15, 2021

Bluebox Corporate Finance Manager, Sam Barr, shares his thoughts on the Spring Budget:

On March 3rd, Chancellor Rishi Sunak delivered his long-awaited 2021 Spring Budget, setting out his plan to support Britain on its road to recovery from COVID-19 and the future rebuild of the economy.

Akin to the housing market, which has seen an increase in transactions driven by buyers looking to benefit from savings on stamp duty, the UK M&A market saw a spike in activity in early 2021 as sellers rushed to complete deals to pre-empt any potential tax rate increases.

Many people had feared that Entrepreneurs’ Relief (whereby the capital gains tax payable on the first £1m of proceeds is 10% instead of 20%) could get scrapped, or that the Chancellor might equalise capital gains tax with income tax. In the end, however, the scurry was in vain with the Budget bringing the welcome news to business owners that capital gains tax was to remain unchanged… for now…

While ‘D-Day’ never came, it is expected that reforms to capital gains tax will be considered again in the future. Consequently, with the combination of sellers sitting on potentially large capital gains and the significant amount of dry powder in the market (amongst both private equity and corporates), it is anticipated that there will be plenty more M&A and investment in 2021.

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