If you’re preparing to sell your business, wind it down, or even pass it on to the next generation, there’s a major change you can’t afford to overlook.
New Capital Gains Tax (CGT) rules came into effect from 6th April 2025. These changes are already influencing how much tax business owners pay when exiting, and they make planning more important than ever.
So, what’s different, and what can you do to protect the value you’ve built?
What Has Changed with CGT?
The most significant update is to Business Asset Disposal Relief (BADR). From April 2025, the tax rate under BADR has increased from 10% to 14% on qualifying business sales. While the £1 million lifetime limit remains the same, there’s another rate rise scheduled to 18% in April 2026.
This shift makes timing a critical factor. Business owners who are considering a sale or succession in the next year or two may still be able to benefit from the lower 14% rate, but waiting beyond April 2026 could mean a higher tax bill.
Alongside BADR, other CGT rates have also changed. Basic rate taxpayers now pay 18% on residential property and other assets, while higher rate taxpayers pay 24% on most capital gains, including residential property. The annual exempt amount has also been reduced to just £3,000 per individual, limiting the amount of gains you can make tax-free.
What Business Owners Should Do Now
If you’re a business owner considering an exit, these new rules don’t mean opportunities are lost, they just mean planning ahead is more important.
The first step is to review your exit strategy. The new 14% BADR rate remains competitive, but without proper planning you may not be able to take full advantage of it. This is particularly important if you’re looking at options such as selling to a third party, transferring ownership to family, or exploring an Employee Ownership Trust (EOT).
It’s also essential to get a professional valuation of your business. Knowing what your business is truly worth provides a foundation for any sale or succession plan and gives you more leverage in negotiations.
Timing is another key factor. Exiting before April 2026, while the 14% rate still applies, could save you a significant amount of tax compared with waiting until the rate rises to 18%. Even if your exit is a few years away, it’s worth looking ahead now.
Equally, ensure your business is “exit-ready.” Clean accounts, streamlined operations, and clear documentation of systems and processes can help preserve value and make the business more attractive to buyers or successors.
Finally, and most importantly, speak to an expert early. The best exit outcomes don’t happen overnight, they’re the result of careful planning and tailored advice. Whether it’s structuring a sale, setting up an EOT, or planning succession, professional guidance will help you avoid pitfalls and maximise the rewards of your hard work.
Final Thoughts
The new CGT rules for 2025 have changed the landscape for business owners planning an exit. But with the right planning, you can still secure a strong outcome and protect the value you’ve built.
Whether you’re looking to sell, step back, or hand over the reins, early planning is the key to making the most of your options. A well-prepared exit strategy will ensure your years of effort and risk are rewarded, rather than eroded by tax.
At Greystone Advisory, we help business owners prepare, plan, and execute successful exits. Whether you’re 12 months or 10 years away, we’ll guide you through every stage.
Get in touch today to discuss your options and start planning the exit your business deserves.
