UK business owners planning to sell their companies face higher taxes starting April 2026, as changes to Business Asset Disposal Relief push Capital Gains Tax rates up. Experts urge quick action to avoid losing thousands in potential proceeds.
Business leaders across the UK are getting urgent advice to prepare for sales now. The CFO Centre, a firm that helps companies with part time financial officers, warns that delays could cost owners big money due to upcoming tax shifts.
These changes come amid broader economic pressures. The government aims to balance budgets after recent fiscal challenges. Many entrepreneurs built their firms during tough times like the pandemic and now eye exits as markets recover.
What Changes Are Coming to Business Asset Disposal Relief
Business Asset Disposal Relief offers tax breaks on gains from selling qualifying businesses or shares. It reduces the Capital Gains Tax rate on up to one million pounds of lifetime gains.
From April 2025, the rate stands at 14 percent for eligible sales. This jumps to 18 percent in April 2026. The standard Capital Gains Tax rate for higher gains remains at 24 percent.
This rise follows a pattern of adjustments. The relief used to cap at 10 percent until recent budgets tightened rules. Owners who sold under the old rate kept more money after tax.
The lifetime limit stays at one million pounds. This cap has not changed since 2020 when it dropped from 10 million pounds. Many see this as a way to encourage smaller business sales while raising revenue.
Experts note that these tweaks align with global trends. Countries like Canada and India have also hiked capital gains taxes recently to fund public services.
Why Acting Now Matters for Business Sales
Selling a business takes time and careful planning. Owners must organize finances, forecasts, and documents to attract buyers and pass checks.
Sara Daw, CEO of The CFO Centre, points out that preparation often spans months or years. She advises starting early to beat the April 2026 deadline.
Delays mean facing the higher 18 percent rate. For a one million pound gain, this could add tens of thousands in extra tax compared to current rules.
Recent events highlight the rush. The Autumn Budget 2024 confirmed these increases, sparking a wave of inquiries from worried entrepreneurs.
Data shows business sales picked up in 2025. Mergers and acquisitions rose by 15 percent in the first half of the year, per industry reports. This surge ties to owners aiming to lock in lower taxes.
Failing to prepare can lead to rushed deals. Buyers spot weak spots during reviews, which might lower offers or kill sales entirely.
Key Steps to Prepare Your Business for Sale
Business owners should focus on building strong financial records first. This includes clean books and realistic growth projections.
Hiring experts like part time CFOs can speed things up. These pros guide through the process and spot issues early.
Here are essential steps to get exit ready:
- Review all assets and liabilities for accuracy.
- Build a solid business plan that shows future value.
- Gather legal documents like contracts and patents.
- Boost operations to make the company more appealing.
Owners might also consider timing. Selling before April 2026 locks in the 14 percent rate for qualifying gains.
Impact on Different Business Types
Small and medium enterprises feel the pinch most. These firms often rely on owner exits for retirement funds.
For example, a tech startup founder selling for 800,000 pounds would pay less tax now than in 2026. The difference could fund new ventures or personal needs.
Larger companies face mixed effects. Their gains might exceed the one million pound cap, hitting the full 24 percent rate sooner.
Industry sectors vary too. Retail and hospitality see more sales amid recovery, while tech booms with innovation.
A table below outlines tax scenarios for a 1 million pound gain:
| Tax Year | BADR Rate | Tax on 1M Gain | Savings vs 2026 |
|---|---|---|---|
| Up to 2024 | 10% | 100,000 | 80,000 |
| 2025 | 14% | 140,000 | 40,000 |
| 2026 onward | 18% | 180,000 | N/A |
This shows clear benefits to acting soon.
Farmers and property holders note related changes. Agricultural relief reforms from April 2026 cap full tax breaks at one million pounds, with partial relief above that.
Broader Economic Context and Advice
These tax shifts tie into the UK’s push for fiscal stability. The government forecasts higher revenue to support services like healthcare and transport.
Critics argue it discourages entrepreneurship. Some business groups call for reversals, citing slower growth risks.
Yet supporters say fairer taxes help everyone. Recent polls show mixed public views, with many backing changes to fund public needs.
Owners should consult tax advisors for personal fit. Each case differs based on business type and gain size.
In light of these developments, share your thoughts in the comments. Have you faced similar tax hurdles? Spread this article to help fellow entrepreneurs stay informed.
