Close Brothers Calls For Common Sense Budget 2021

Any changes to business assets disposal relief (entrepreneurs tax relief) in the March Budget will accelerate the number of brokers selling up and leaving the profession, according to Paul Trail, managing director of Close Brothers Premium Finance (CBPF). Chancellor Rishi Sunak is due to deliver the Budget on 3 March this year. There are around 2,750 brokers in the UK (and Eire) and CBPF partners with 1,600 of them.

CGT changes to accelerate M&A

Paul said the combination of ever-increasing regulation and potential changes to capital gains tax (CGT) for entrepreneurs, risk “tipping independents over the edge, leading to a big jump in deal activity, with consolidators the major beneficiaries. Although many brokers are still undecided, discussions I’ve been having with broking contacts convince me that many would have little hesitation in throwing in the towel before a new CGT regime was implemented.”

Currently, Entrepreneurs’ Relief reduces the amount of CGT on a disposal of qualifying business assets, subject to a lifetime limit.

Paul said that brokers were key members of the entrepreneurial business community that government is relying on to kickstart the economy after the UK comes out of lockdown, not only as wealth creators in their own right, but also providing commercial insurance for UK businesses, especially in a hardening market where double-digit increases are the norm in many classes.

Commercial broking holds up

Paul said that commercial broking has held up well during the pandemic, not least because insurance is compulsory and government policy to manage the pandemic, including furlough and the Coronavirus Business Interruption Loan Scheme (CBILS) scheme have enabled businesses to hold on to cash and keep trading.

“We saw a lot of increased demand for premium financing in March/April 2020, at the start of the lockdown, but demand levelled off later in the year after government support kicked in. As SMEs tend to renew their insurance at the end of their financial year, which is usually the end of March, the Budget announcement could have a positive impact on customer activity.”

He urged brokers to ensure they have premium finance facilities in place to service the needs of brokers looking to spread the cost of their insurance, “especially in light of the hard market, which is going to give many businesses a real shock when they come to renew.”

He said: “The commercial broking sector needs a period of certainty while we put the challenges of the last 12 months firmly behind us and regrow confidence in our industry.”

It sometimes takes many years to achieve overnight success.

IE Comment:

The one major casualty of the pandemic has been idea that entrepreneurs have a real value to the UK economy. Never has there been such a sustained financial and social attack on freelancers and small business. Those in the public sector have defined themselves as key workers during lockdowns, but small traders and freelancers are mocked online as being `chancers and tax dodgers.’

Nobody in the public sector seems to understand that the wages for the public sector ultimately come from taxation on goods, services, VAT, employee NI, employee pensions and company profits.

The net result of this private sector contempt will be that people with get-up-and-go do exactly that; leave the UK to try their luck elsewhere, in a country where business skills are rewarded with a tax-free lump sum when that company is sold 20-30 years down the line. If that happens then Britain will decline, ruined by a mixture of overpaid public sector jobs and ever-increasing benefits payouts. The final nail will possibly be adding on means-tested UBI by 2030, in a sop to keep younger people who own nothing on state benefits for their entire lives.

If there is no real incentive to build a company up, and then obtain some tax relief on the sale price, many will rightly think, what on earth is the point? And not just in the insurance sector either.

 

 

 

About alastair walker 6186 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

Be the first to comment

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.