At the beginning of April, major changes to the Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR) regime in Britain took effect, following legislative measures introduced by the Rt. Hon. Rachel Reeves, Chancellor of the Exchequer, last Autumn.¹

Owners of British companies have finally crossed the threshold into a higher rate of Capital Gains Tax, the rate that applies to Business Asset Disposal Relief and Investors’ Relief, now increased from 10% to 14% for disposals made on or after 6 April 2025 (even if the deal was agreed prior to April 2025 with Heads of Terms signed and filed).

Although this has been anticipated for some time, this effectively means that for deals in flight, owners and shareholders amid a sale of qualifying assets are now subject to a much less favourable tax environment compared with preceding years, even if the deal was agreed prior to April 2025 (with Heads of Terms signed and filed).

Exploiting the BADR “Cliff Edge”

The recent rate increase signals a window of opportunity to take advantage of the existing tax regime before further increases take hold, with the rate of Capital Gains Tax, that applies to Business Asset Disposal Relief and Investors’ Relief, set to increase to a significantly higher18% – the looming cliff edge if you will – for disposals made on or after 6 April 2026.

This means that if you’re thinking about selling your business in the next 12 months, the time to take action is now. Deals can take up to twelve months to complete from the point of instruction to final sale, meaning that business owners who have paused on their plans to sell, or who adopt a “wait and see” attitude could miss out on the current lower rate ahead of next year’s increase.

Anticipation of the rate increases announced in 2024 have likely had a significant influence on acquisition activity, including the strategy and tax planning efforts for a number of businesses, acquirers, individuals, trustees and financial investors.²

Mike Whittle, Managing Director of EvolutionCBS, reflects on the far-reaching influence of the rate change:

“The looming rate change has focused the minds of vendors and acquirers alike. Following the April 6^th increase, we are advising vendors to consider the wider implications of delaying any decision to sell.

“What is undeniable is that in twelve months there will be another significant rate increase, resulting in the erosion of potential value and a much higher tax bill for vendors.

“Given the challenges involved in preparing a business for sale and timescales for engaging in meaningful negotiations with acquirers, sellers would be wise to seek advice on the timing of a sale as soon as possible.” Mike concludes.

Expert advice is essential

The decision to sell isn’t just about timing—it’s about your exit planning and strategy. It is essential to have a trusted advisor that can assist with your exit planning, managing an orderly sale process and engaging with motivated acquirers from across the globe in the right way. Crucially, it takes world-class time and expertise.

The experienced Deal Team at EvolutionCBS have a suite of support services to assist business owners to prepare and optimise their success planning journey.

Our team of experts provides:

> Independent business valuation and market-readiness assessment

> Full business preparation support services

> Discreet, professional marketing to targeted buyers (including Private Equity firms)

> Full advisory support through negotiation, Heads of Terms, and Due Diligence

> Coordination with your accountants and tax advisers to maximise net proceeds

EvolutionCBS is currently supporting multiple clients aiming to complete their sales ahead of the next expected rate change in April 2026 — decisive action will be key for any business owners/shareholders looking to exit successfully in the near term.

Disclaimer: This article is for general information purposes only. EvolutionCBS does not provide tax, advice. We strongly recommend that business owners seek independent professional advice from a qualified tax advisor before making any decisions related to tax planning.

References:

1. UK Gov policy paper: https://www.gov.uk/government/publications/changes-to-the-rates-of-capital-gains-tax
2. Accountancy Age – Autumn Budget 2024: Industry reactions: https://www.accountancyage.com/2024/10/30/autumn-budget-2024-industry-reactions/

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If you would like a no-obligation consultation on the sale of your business or would like to discuss our Business Valuation Service, click here.

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.