Preparing for Potential Capital Gains Tax Increases on Business Disposals
Owner-managed business directors considering an exit, shareholders planning a future disposal, and entrepreneurs monitoring potential tax changes. How future increases in Capital Gains Tax (CGT) may affect net sale proceeds, how those changes interact with Business Asset Disposal Relief (BADR), and why timing of disposal is commercially important. Even modest rate increases can materially reduce net proceeds on a business sale. Exit timing, relief eligibility, and transaction structure should be reviewed before negotiations progress.How CGT Increases Affect Sale Proceeds
When selling shares in a trading company, the gain is subject to Capital Gains Tax. Any future rate increase directly reduces the after-tax amount retained by the seller. The financial impact depends on:- The size of the gain
- Whether Business Asset Disposal Relief applies
- The applicable CGT rate at the time of disposal
Sell Before April 2025? Understanding the Tax Impact
Planning to sell your business or shares? Capital Gains Tax rates for Business Asset Disposal Relief (BADR) are set to rise from 10% to 14% on 6 April 2025, and to 18% from 6 April 2026. Selling before these dates could result in significant tax savings. Business Asset Disposal Relief (BADR) applies to the sale of a business, shares in a trading company, or an individual’s interest in a trading partnership. When this relief is available, a reduced Capital Gains Tax (CGT) rate of 10% is currently applied instead of the standard rate, potentially resulting in significant tax savings for those exiting their business. It is important to note the future increases in the CGT rate for BADR that were announced as part of the Autumn Budget measures. The CGT rate for BADR will increase to 14% for disposals made on or after 6 April 2025. A further increase to 18% will apply for disposals made on or after 6 April 2026. For business owners contemplating an exit strategy, the coming months might be an opportune time to consider selling before the upcoming changes take effect on 6 April 2025.Interaction with Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief can reduce the rate of CGT on qualifying business disposals, subject to meeting the statutory conditions. Future changes may:- Alter the CGT rate applicable to qualifying gains
- Change eligibility thresholds or qualifying conditions
- Reduce the comparative benefit of BADR
The Importance of Timing
Where rate increases are anticipated or announced, timing becomes a strategic consideration. Delaying disposal could result in:- A higher effective CGT rate
- Reduced net proceeds
- Missed opportunity to secure a lower prevailing rate
Real-World Scenarios
- Negotiating a current sale: Reviewing whether completion timing affects CGT exposure.
- Considering accelerating an exit: Assessing whether bringing forward disposal protects value.
- Reviewing BADR eligibility: Confirming qualifying conditions are met before rate changes take effect.
Strategic Review Before Heads of Terms
Tax timing decisions are most effective before heads of terms are agreed. Once legal documentation progresses, flexibility may reduce.Concerned About Future CGT Increases? Review Your Exit Strategy
Potential future increases in Capital Gains Tax can significantly reduce the proceeds you retain when selling your business, particularly if timing and reliefs are not carefully considered. Cigma Accounting works with business owners across London to assess the likely impact of CGT changes, model different exit scenarios, and structure disposals efficiently with guidance from an experienced tax accountant in London.
From our Farringdon, supporting clients in Chancery Lane and Liverpool Street, we integrate CGT planning into your broader succession and exit strategy rather than treating tax as an afterthought. With physical offices across London, our team provides strategic and commercially focused support through trusted accounting services London expertise so you can plan your sale with clarity and confidence.
WILL FUTURE CGT RISES REDUCE YOUR EXIT PROCEEDS?
Even modest increases in Capital Gains Tax can materially affect what you retain from a business sale. Reviewing timing, relief availability, and deal structure now can help preserve value before rates potentially change.
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