The Rt. Hon. Rachel Reeves’ Autumn Budget delivered headline-grabbing announcements — from higher dividend taxes to a major shift in the taxation of company share sales to Employee Ownership Trusts (EOT).

This Budget will likely rebalance the landscape for entrepreneurs considering exit or succession via EOTs, which prior to the announcements benefitted from a 100% relief from Capital Gains Tax. Some advisors suggest this shift in stance on EOT taxation by the Exchequer will likely push some shareholders away from this mechanism back towards more traditional buyer structures.

Headline Measures Impacting Business Owners

1. Reduced CGT Relief on Sales to Employee Ownership Trusts (EOTs)

The most significant change for potential vendors is the cut to Capital Gains Tax (CGT) relief on sales to an Employee Ownership Trust (EOT) — down from 100% to 50%.

Previously, EOT sales offered complete CGT exemption, making them an attractive, tax-efficient exit route for owner’s keen to reward employees and maintain continuity. The new 50% relief dramatically reduces that advantage.

In practical terms, a business owner who would previously have paid no CGT on an EOT sale will now face a 50% charge on their qualifying gain — a shift that makes this route materially less appealing from a tax perspective.

Implications for Exit Strategy

For many, this change will re-open the discussion around traditional share sales to trade or financial buyers, where proceeds may instead attract Business Asset Disposal Relief (BADR) at an effective 14% CGT rate (subject to qualification).

This could mark a notable swing back towards the private M&A market. While EOTs will remain relevant for cultural or legacy-driven exits, tax efficiency is no longer the primary motivation. Vendors seeking maximum after-tax value are now more likely to explore direct sales to acquirers.

The upside? Buyer appetite remains strong. As discussed in our pre-Budget commentary, financial investors and trade buyers continue to target high-quality, well-prepared UK businesses. The combination of sustained demand and the relative unattractiveness of the EOT route could increase deal flow in the coming months — particularly for well-run mid-market firms.

2. Dividend Tax Increase

A 2-percentage-point rise in Dividend Tax means business owners will now pay an extra 2p on every £1 of dividend income. This move narrows the gap between taking profits as dividends versus salary, and will influence how owners extract value before, and during a sale.

3. Business Rates Relief for Key Sectors

Owners of properties in retail, hospitality, and leisure sectors will benefit from the lowest level of business rates since 1991 — a welcome boost for those operating in consumer-facing industries still navigating tight margins and inflationary pressures. This will likely attract investment interest in the sector, particularly from financial/specialist investors.

Key Takeaway

The Autumn Budget reinforces the importance of forward planning for business owners and the need for professional advice, particularly when it comes to Exit Planning and specialist Tax advice. Every exit route now requires sharper evaluation and expert advice — not only of valuation and timing, but also of tax efficiency, structure, and buyer alignment.

As Mike Whittle, Managing Director of EvolutionCBS, notes:

“Legislation can shift overnight, but fundamentals never change. Prepared, well-advised business owners still achieve the strongest outcomes — whatever the Budget says. Crucially, to achieve the best possible deal structure/valuation, sellers will need expert advice on valuation and a proactive, thorough approach to the sale.”

Next Steps for Business Owners

1. Review your exit timeline and options. Prioritise a proactive sale process and if an EOT was previously under consideration, revisit your assumptions.
2. Model comparative outcomes. Seek professional advice on your options, including a review of possible share-sale structures.
3. Get clarity on valuation and buyer appetite. With market demand still strong, the right preparation and a professional valuation can deliver a premium outcome.

At EvolutionCBS, our Low Volume Premium Guided Service helps business owners plan strategically for sale — aligning structure, timing, and valuation to maximise results.

To discuss your exit options following the Autumn Budget 2025, contact us at www.evolutioncbs.co.uk/contact or connect directly with one of our team.

fraser.hodgkiss@evolutioncbs.co.uk
Get In Touch
www.evolutioncbs.co.uk
07957 834506
0118 959 8224

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As a long-established premium provider of business sale advisory services to UK businesses, EvolutionCBS offers business owners a complimentary and confidential discussion on how their specific objectives could be met and provides them with pragmatic, practical advice on how to begin preparing both themselves and their businesses for future sale or investment.

EvolutionCBS works with owners of UK businesses in any sector, finding buyers from around the world through highly targeted research and supporting clients with dedicated Director-led teams, at every stage of their journey to a successful sale or investment, we boast a market leading success rate with 14 year average above 75%.

If you are an owner or shareholder of a business and would like a no-obligation consultation on the sale of all or part of your business, please email: info@evolutioncbs.co.uk or contact us on Tel: 0118 959 8224.