If you’re planning to sell your business, the timing of your exit could make a meaningful difference to how much you keep after tax.
From April 2026, the UK government is set to increase the Business Asset Disposal Relief (BADR) rate from 14% to 18%. For owners who qualify for BADR and are already considering a sale, there may be a financial case for bringing the transaction forward.
Martin Brown, CEO of Elephants Child, a business growth advisory firm, uses a real‑world scenario to illustrate the impact of selling in November 2025 versus June 2026.
At a glance
- Selling before April 2026 could offer tax advantages under the current BADR rate.
- Shareholders may retain more of the sale proceeds by completing the transaction before the change.
- The decision should balance tax efficiency with broader considerations, such as market conditions, buyer readiness, and long‑term goals.
The example scenario
- Sale price: £6,000,000
- Shareholders: Two individuals, each owning 50%
- Shareholding duration: Five years (qualifying for BADR)
Transaction costs
- Legal: £60,000
- Accountancy: £30,000
- Corporate finance: £35,000 fixed + 3.5% success fee (£210,000)
- Total costs: £335,000
Tax assumptions
- BADR allowance: £1,000,000 per shareholder
- CGT rates:
- November 2025: 14% on BADR‑qualifying gains, 24% on remaining gains
- June 2026: 18% on BADR‑qualifying gains, 24% on remaining gains
November 2025 sale: lower BADR rate
Step 1: Net proceeds before tax
- Gross sale price: £6,000,000
- Less transaction costs: £335,000
- Net before tax: £5,665,000
Step 2: Capital Gains Tax (CGT)
Each shareholder receives £3,000,000.
- First £1,000,000 taxed at 14% = £140,000
- Remaining £2,000,000 taxed at 24% = £480,000
- Total CGT per shareholder: £620,000
- Total CGT (both shareholders): £1,240,000
Step 3: Final net proceeds
- £5,665,000 – £1,240,000 = £4,425,000
- Net per shareholder: £2,212,500
June 2026 sale: higher BADR rate
Step 1: Net proceeds before tax
- Same net before tax: £5,665,000
Step 2: Capital Gains Tax (CGT)
Each shareholder still receives £3,000,000.
- First £1,000,000 taxed at 18% = £180,000
- Remaining £2,000,000 taxed at 24% = £480,000
- Total CGT per shareholder: £660,000
- Total CGT (both shareholders): £1,320,000
Step 3: Final net proceeds
- £5,665,000 – £1,320,000 = £4,345,000
- Net per shareholder: £2,172,500
Side‑by‑side comparison
| Metric | November 2025 | June 2026 |
|---|---|---|
| Net proceeds before tax | £5,665,000 | £5,665,000 |
| Total CGT (both shareholders) | £1,240,000 | £1,320,000 |
| Final net proceeds (after tax) | £4,425,000 | £4,345,000 |
| Net per shareholder | £2,212,500 | £2,172,500 |
Why timing matters
In this example, selling in November 2025 results in £80,000 more in net proceeds than selling in June 2026, solely because of the lower BADR rate. Each shareholder would retain an extra £40,000 by completing the sale before the April 2026 change.
That difference may not be transformational in the context of a multi‑million‑pound transaction, but it is certainly meaningful – particularly for owners focused on maximising their post‑sale wealth.
If your business is already well‑prepared for sale and you qualify for BADR, completing the transaction before the rate rises could be a financially sensible step.
However, tax is only one part of the decision. The right timing should also reflect:
- Market conditions and valuations
- Buyer appetite and readiness to complete
- Your personal and family objectives
- The business’s long-term strategic position
Our experience working with business owners shows that no two exits are the same. The most successful outcomes are usually built on a bespoke strategy tailored to the business, the shareholders and their wider financial plans.
Ready to explore your options?
With the next Budget pending, it’s a good time to ask:
- What is your business really worth today?
- How could forthcoming tax changes affect the value you realise?
- Is it better to sell, de‑risk, or focus on further growth before exiting?
Understanding your business’s value and choosing the right timing for an exit are critical to maximising returns. Please speak to us about how upcoming tax changes could influence your plans and what steps you can take now.
We work in conjunction with an extensive network of external growth advisers and SME specialists, such as Elephants Child, carefully selected by St. James’s Place. The services provided by these specialists are separate and distinct from those carried out by St. James’s Place and include advice on growing your business and preparing it for sale and exit.
Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.
Important information
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
For more information on how retiring abroad and drawing a UK pension could affect your tax position and long‑term plans, please get in touch with Berkshire Financial Planning for expert financial advice.
