If you are considering closing your company, careful planning could make a significant difference to the amount you retain personally. From 6 April 2026, the rate of Business Asset Disposal Relief (BADR) will increase from 14% to 18%. This change means that for shareholders who qualify for BADR, extracting retained reserves from a company may pay more Capital Gains Tax (CGT) if they do not act before the change takes effect. To help clients benefit from the current lower rate, now is a crucial time to review your options.
What is a Members’ Voluntary Liquidation (MVL)?
A Members’ Voluntary Liquidation (MVL) is the formal process used to close a solvent company, one that can pay all its liabilities, and distribute the remaining assets to shareholders.
To learn more about this process, you can visit our dedicated page on Members’ Voluntary Liquidation (MVL) services.
An MVL allows:
- Funds to be extracted as capital rather than income, which typically results in lower tax charges
- Potential eligibility for BADR on qualifying distributions
- A structured and compliant closure of your company
Why timing matters
To take advantage of the current 14% BADR rate, distributions should be received before 6 April 2026. After that date, qualifying gains will be taxed at 18%, increasing the tax payable on distributions from your company.
As a result:
- The window to secure the lower BADR rate is now limited
- Early planning with advisers and insolvency practitioners is essential
- Acting now helps avoid delays and capacity pressures closer to the deadline
How we can support you
Our licensed Insolvency Practitioners specialise in solvent liquidations and can guide you through the entire MVL process, from initial assessment to final distribution.
We will:
- Assess whether an MVL is right for your circumstances
- Explain your responsibilities as a director
- Help create or manage complex strategies if required
- Manage all statutory requirements and filings
- Ensure a smooth, compliant process from start to finish
Find out more about our wider Restructuring and Insolvency Services to support businesses and owners through strategic transitions.
What this means for you
Whether you are:
- Planning to retire
- Ending a trading company that has served its purpose
- Looking to extract retained profits efficiently
- Considering a clean exit strategy before future tax changes
An MVL could be a valuable option, but the opportunity to benefit from the current BADR rate will not last long.
Next steps
If you are thinking about closing your company in a tax-efficient manner, we recommend speaking with us as soon as possible. Early engagement gives you time to:
- Confirm BADR eligibility
- Plan distributions with your tax adviser
- Progress your MVL ahead of the April 2026 change
We would be pleased to have a confidential, no-obligation discussion about your options.
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