£100m set aside to help brokers beat the taxman
Swinton has set aside £100m for its acquisition team to help fast track acquisitions and help brokers benefit from the current rules.
The broker said it is anticipating acquisition activity to increase in the coming months as brokers rush to sell their businesses ahead of the capital gains tax reforms which come into force on April 6th 2008.
Generally, business owners and shareholders selling business assets before the end of the current tax year, on or before 5 April 2008, will pay tax on any profit made at a rate of 10%, rising to 18% for disposals on or after 6 April 2008, an 80% increase in tax.
During 2007 Swinton has been paying very attractive prices resulting in the acquisition of over £50 million gross premium income. It continues to grow its branch network and has also announced a commitment to significantly grow its commercial presence adding to its five established commercial offices. It plans to provide national coverage via a number of commercial regional centres.
Hazel Walker, who will head the acquisitions team, said: “The UK insurance industry is facing a period of significant change and it’s an especially daunting time for brokers looking to sell in the next year or so; trying to second guess the likely movement on prices against a background of changing tax rules. The new CGT rules will put pressure on brokers considering their future but I believe that the period from now until the end of the tax year is an exceptionally favourable time for brokers to sell their businesses, prices are high and tax rates are low. Brokers have spent years building their business and now want to exit taking the fruits of their hard work with them rather than handing a sizeable chunk of their proceeds over to the tax man.
“We have seen an increase in the number of brokers wanting to talk to us, especially from established commercial brokers interested in exploring the various options available to them. We have a wealth of experience in acquiring businesses with over 300 transactions completed to date and our pipeline of transactions has never been stronger.”
