The Impact of the CGT Rate Increase on Business Asset Disposal Relief (BADR)
With just five months until the Capital Gains Tax (CGT) rate with Business Asset Disposal Relief (BADR) rises from 10% to 14% on lifetime gains up to £1m, SME business owners considering an exit should take note. Selling before April 2025 could lead to significant tax savings, particularly for companies with multiple shareholders.
Five months isn’t long to complete a sale, but sectors in high demand like IT services, commercial cleaning, and facilities management - especially those with service contracts - may still have time to finalise deals within this timeframe.
Looking further ahead, BADR is set to rise again to 18% on lifetime gains up to £1m in April 2026. Given that many sale processes take 9-12 months, if you are planning to retire or exit in this time frame, it is worth starting your exit preparation now to avoid the impact of this upcoming increase. The recent interest in our business sale mandates reflects strong buyer activity, so there is still ample opportunity for owners to complete a favourable exit.
As always, it is worth preparing well in advance. The time required for a buyer’s Due Diligence is often overlooked, so preparing your Due Diligence dataroom ahead of time, will help you avoid unnecessary delays to your business sale process. Please Contact Us for a sample Due Diligence Questionnaire.
If you’re considering selling, our team is here to help you navigate the process efficiently and achieve the best outcome. We offer a Free Business Appraisal which assesses both the financial and critical non-financial factors that determine the valuation, deal structure and overall sellability of your business before you engage us.
Ultimately, strong businesses will always sell well and achieve good value, so it may well be best to take time to focus on building value into your business, rather than rushing to sell before the deadline of the CGT increase. But there is a window of opportunity to optimse the overal net preceeds from the sale of your business.
At Hornblower, we are always happy to discuss your plans for the future, looking at all the options for your exit as well as providing a free indicative valuation. Whilst our business is about selling businesses, we help you decide whether a business sale is right for you and your business before you engage us. Do get in touch to arrange a chat.
