For many business owners, selling their company marks the culmination of decades of hard work and success. It’s a moment to cash in on years of sacrifice or to move on to new ventures. However, timing is critical when considering the sale. A significant tax change is on the horizon that could dramatically affect the profitability of selling your business, making it crucial to act before April 2026.
The UK government has announced a sweeping increase in Capital Gains Tax (CGT) rates for those eligible for Business Asset Disposal Relief (BADR). The tax change could cost entrepreneurs tens of thousands of pounds in additional tax if they wait too long to sell. Here’s why selling before April 2026 might be the smartest financial decision you make.
Why Waiting Could Cost You
When it comes to selling a business, time isn’t just money—it’s also the key to maximizing your profit. Under the current tax law, the CGT rate for individuals who qualify for BADR is 14% on the first £1 million of lifetime gains. However, starting in April 2026, the rate will increase to 18%. This shift means that the longer you wait, the more you’ll pay in taxes.
For example, let’s look at a simple scenario. If you sell your business now and make £1 million in profit, the tax you’ll pay is £140,000. However, if you wait until after April 2026, that tax bill rises to £180,000. This represents an additional £40,000 to £80,000 in taxes—an amount you could use to fund new investments, retire comfortably, or even reinvest in your next business.
How Much Will You Really Lose?
It’s not just the total tax amount that could hurt business owners. Delaying the sale could also affect how much you get to keep after the transaction. Suppose you’re selling for £3 million, for example. Under the current tax regime, the tax bill might be in the region of £420,000. But post-2026, that figure could rise to £540,000.
This increase may not sound like a huge jump at first, but when it comes to selling a business that you’ve spent decades building, every penny matters. By acting now, business owners can avoid this tax hike and preserve more of the sale’s proceeds.
The Impact of Timing on Your Business Sale
Timing your exit strategy is always tricky, but in light of the new tax rules, it’s more important than ever. The government’s decision to increase CGT rates for BADR-eligible business owners means that the clock is ticking, and every delay could cost you more. But there’s good news: There’s still time to act.
Business owners looking to sell should begin preparing their business for sale sooner rather than later. This gives you enough time to maximize the value of your company, find the right buyer, and ensure that you can complete the sale before April 2026.
Buyers Are Looking Too
The potential tax increase could also impact buyers. If they anticipate higher tax liabilities after the change, they might offer less for the business now in anticipation of higher taxes in the future. This means that waiting may not only result in higher taxes for you but also a lower sale price.
While this could be a negative for sellers, it also presents an opportunity. The upcoming tax changes might encourage buyers to act now to avoid the higher rates, which could create a more competitive environment for sellers. As the tax increase draws nearer, more buyers might be eager to lock in a deal, giving business owners more leverage in negotiations.
Why You Should Sell Now
If you’re considering selling your business, now might be the right time to act. The increase in CGT rates scheduled for April 2026 could cost you tens of thousands of pounds, but by selling before the change, you can avoid this hefty tax hike. Even if you’re not yet ready to exit, start planning your strategy today to ensure that you make the most of the current tax benefits.
Waiting to sell your business could mean paying more tax and receiving less money from the sale. So, before you make any final decisions, consider the financial implications of the upcoming CGT increase and act accordingly.
FAQs
1. What is Business Asset Disposal Relief (BADR)?
BADR is a tax relief scheme that reduces the rate of Capital Gains Tax (CGT) for business owners selling their businesses or shares in a business. Currently, the CGT rate is 14% for the first £1 million of lifetime gains.
2. How much will the CGT rate increase in 2026?
Starting in April 2026, the CGT rate under BADR will rise from 14% to 18%, which could significantly increase the tax liability for business owners selling their businesses.
3. Why should I sell my business before April 2026?
Selling your business before April 2026 allows you to take advantage of the current 14% CGT rate, potentially saving you tens of thousands of pounds compared to the 18% rate that will apply after the tax change.
4. How much tax will I pay if I sell my business after April 2026?
If you sell your business after April 2026, you will pay 18% CGT on the first £1 million of lifetime gains. This could increase your tax bill by up to £80,000 compared to selling before the tax change.
5. Will buyers be affected by the new CGT rates?
Yes, buyers could be impacted by the upcoming CGT increase, which may lead them to offer lower prices or act more quickly to secure a deal before the tax hike.
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