Estate agents hoping to sell their businesses have until the Spring budget to get deals over the line or face a 45% CGT tax.
The measure is rumoured to be on Chancellor Rishi Sunak’s tax-raising list, one of many he’s expected to announce in order to recoup the £300 billion he’s spent nursing the economy through Covid.
The warning has been made by estate agency corporate the Leaders Romans Group, which has been busy during 2020 hoovering up competitor businesses.
This has seen it take on 200 staff, 6,000 extra managed properties, 20 new branches in existing strongholds but also new territories in South Wales and North and East London.
The companies are Moginie James, Scott Fraser, Outlook Property and most recently, Lenwell, its busiest year for acquisitions since Leaders and Romans became one four years ago.
But the company says Sunak’s tax raid could bring this kind of industry consolidation to an abrupt end.
The chancellor wants to raise the CGT paid by business owners selling up from 20% to 45%.
“Such heavy taxes would of course play on the mind of those looking to complete transactions, and it is obviously extremely financially beneficial to do so before the proposed tax rate reform is potentially introduced,” says Matthew Light, Director of Group Mergers and Acquisitions at LRG.
“We at LRG are still open to further acquisition opportunities and will of course explore viability ahead of next March, but depending on the proposed changes, time could be of the essence – even for businesses such as ours that can finalise deals quickly.”