Should business owners sell their company before April 2026?

Simon Daniels, sales director at KBS Corporate (Croner-i)

Upcoming changes to business asset disposal relief rates for capital gains tax purposes mean it makes tax sense to sell up before April 2026, argues Simon Daniels, sales director at KBS Corporate

This year brings tax changes that will fundamentally reshape UK businesses, private equity firms, and company sales specialists. Capital gains tax (CGT) is set to place greater financial pressure on business owners looking to exit.

From 6 April 2026, the changes to the CGT rate for shareholders who qualify for business asset disposal relief (BADR) are expected to significantly reduce the potential proceeds for sellers.

For example, a business sold for £1m could attract an additional £40,000 in CGT if sold after the April 2026 threshold, compared to selling today under current BADR rules. Therefore, business leaders should consider exiting before April 2026, taking into consideration tax savings, investment appetite, potential valuation benefits, and the opportunity to plan a smoother succession.

Save more on CGT selling before April 2026

The most pressing reason for selling a business before April 2026 is to lock in today’s lower CGT rates. Already, BADR offers sellers a 14% CGT rate on the first £1m of lifetime gains, an increase from the 10% CGT introduced in October 2024.

This is due to increase again to 18% in April 2026, representing a nearly double tax rate hike within just two years.

To put that into perspective, a £1m business sale completed on 6 April 2025 would attract £140,000 in CGT. By 6 April 2026, it will rise again to £180,000. Considering that a business sale before 30 October 2024 would attract £100,000 in CGT, this means there is now an additional £40,000 to £80,000 per shareholder simply for delaying the sale. 

These changes are painful for SME business owners who expected a financially secure exit and planned their retirement around the former 10% rate. Exit plans are now looking to be fast-tracked to avoid punitive tax hits.

Indeed, 61% of UK SME owners have thought about exiting their company in the past year, according to M&A specialist Marktlink.

Market demand from investors increases

While higher tax rates can be a deterrent to sellers, they also tend to stimulate mergers and acquisitions (M&A) in the short term. Historically, M&A surges ahead of major financial changes, as investors rush to close deals while tax conditions remain favourable. The same trend is expected in the run-up to April 2026.

In the last three months of 2024, there was a significant increase in the number of companies buying or merging with other companies, with 7,492 completed, marking an 11% increase from 2023. And the state of M&A for 2025 is expected to improve, as stabilisations of interest rates should drive deal-making.

This means that demand for high quality businesses is expected to rise, giving sellers more leverage in negotiations. For prepared owners, this uptick in competition can result in faster deal completions, more attractive offers, and stronger exit terms. Moreover, buyers know that once CGT increases, sellers may factor tax burdens into valuation negotiations, making now a more lucrative time to strike deals.

Expect larger valuations for businesses

An often-overlooked benefit of selling in a competitive M&A market is that you are more likely to achieve higher business valuations. As demand from buyers increases ahead of CGT changes, so too does the value placed on well-managed, profitable businesses.

When there are more buyers in the market, sellers are in a stronger position to negotiate on headline price, favourable deal terms, earnouts, and retention clauses. Business owners may be able to dictate more flexible timelines, creating less stressful transition periods. Valuation multiples are typically stronger during periods of investor optimism, with many buyers looking to deploy capital ahead of a policy shift.

Moreover, if you delay a sale until after April 2026, there is a chance valuations will begin to soften. As the market adjusts to higher CGT, buyer enthusiasm may wane, or deals may be structured to account for lower net proceeds to sellers. This could affect how a business is valued and ultimately reduce overall returns.

Ensure a smooth succession plan

Beyond the financial benefits, selling your business sooner than April 2026 allows you to exit with confidence. Succession planning takes time, but almost half of business owners (48%) admit to not having an exit strategy in place, research by wealth manager Charles Stanley shows.

Whether you are passing your business to a family member, selling to a management team or exiting entirely through acquisition, planning now gives you the flexibility to prepare your organisation for change.

Planning an exit ahead of the BADR rate increase in 2026 ensures several key steps for a smooth acquisition, including planning tax with a financial adviser to minimise liabilities; setting out due diligence and risk mitigation; communicating effectively with staff over the transition; and an overall more structured handover period.

A smooth succession plan also reassures investors, lenders, and buyers that the business can thrive post-exit, potentially increasing its appeal and marketability. If you're a business leader contemplating retirement, a career shift, or simply looking to cash out while conditions are ideal, acting before April 2026 gives you time to exit on your terms rather than under pressure.

Is it time to begin exit plan?

Overall, entrepreneurs are uncertain of the business environment, with a staggering 65% of owners now looking to sell off their enterprises. The government’s decision to increase BADR rates to 18% will reshape how owners exit, potentially adding up to £40,000 in tax per £1m sold. For entrepreneurs, that could mean walking away with significantly less money for the same business - unless they act before April 2026.

Selling a business is never just about the numbers, but in the current climate, timing is everything. In the lead up to CGT increases, the M&A market typically heats up, with greater interest from private equity firms and increased competition for quality businesses. This creates an ideal environment for sellers to secure strong valuations, negotiate favourable terms, and exit with confidence before the next tax year.