BUSINESS owners fear Business Asset Disposal Relief (BADR) will rise again in the Budget as new research shows company sales surged before the previous rise – but one expert warns against rushing through a sale over speculation.
The Capital Gains Tax (CGT) rate on qualifying gains was 10% until April 2025, increased to 14% from April 2025 and rose again to 18% from April 2026.
With another Budget approaching on 28 October, business owners considering a sale fear a further rise and are wondering whether to act sooner rather than risk another change.
Research by Newspage, sponsored by financial advisers, Rowley Turton, suggests that business owners may have rushed to sell companies ahead of one BADR rise.
The 2024/25 figures, the year before the first rate rise, show 61,000 claimants on £18.4 billion of gains – up from 42,000 and £11 billion the year before, after three flat years.
That is a 45% jump in owners cashing out and a 67% jump in gains, ahead of the move from 10% to 14%.
This comes as one expert claimed a rise from the current 18% to 20% is “almost a certainty” in the Budget.
Meanwhile, another expert warned that fast-tracking a business sale over speculation about the Budget could prove costly.
Scott Gallacher, Director at Leicester-based Rowley Turton, said: “Rushing to complete the sale of a business purely because of a potential tax change could be an extremely expensive mistake. For most business owners, the value of the business and the terms of the deal are likely to matter far more than trying to second-guess what the Chancellor might do.
“However, if you’ve already decided to sell and are well advanced in the process, I think there’s certainly an argument for wanting to complete before the Budget. Business Asset Disposal Relief has already become considerably less generous, with the rate on qualifying gains rising from 10% to 14% and then to 18%.
“We don’t know whether it will change again, but if a good deal is already on the table, completing while the current tax position is known removes one element of uncertainty. The key distinction is between bringing forward a sale you already want to make and allowing tax speculation to drive the decision to sell in the first place.”
Gallacher said this could be the final straw for many business owners with mounting tax pressures pushing them to sell up and retire earlier than planned.
He added: “But this is much bigger than BADR. Under successive governments, business owners have increasingly found themselves targeted through higher taxes, reduced allowances, rising employment costs and a growing regulatory burden. As a business owner myself, I understand the feeling that the deck is increasingly being stacked against you.
“The conversation I’m hearing more often is: ‘I’ve had enough, Scott. Do I have enough to sell up, retire a few years earlier, travel more and enjoy the wealth I’ve spent decades creating?’ For a government needing growth, increasing CGT now would be an own goal.”
Martin Rayner, Financial Adviser at Compton Financial Services, said “a move toward 20% is almost a certainty”.
He added: “BADR is already climbing toward capital gains territory. Another Budget lift would surprise nobody. Labour’s direction of travel is clear: raise more money, not curb spending. With manifesto limits on the main income-tax levers, pressure falls on rates like BADR.
“Core supporters will not object to another ‘tax the rich’ turn of the screw. A move toward 20% is almost a certainty. Owners who wanted out have known that since the election. The live effect is not a mass stampede of new sellers.
“It is people already in the process speeding up before the Budget. Push it any closer to full capital gains and the reward for taking business risk collapses. Tax entrepreneurs like people holding shares and Britain’s growth stagnates.”
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said the data shows that small business owners accelerate timelines to sell ahead of tax hikes.
He added: “Everything points to a third tax-raising Budget next month. Business Asset Disposal Relief has already crept from 10% to 14%, then 18%, putting capital gains tax squarely at the centre of every exit strategy.
“For a government that won’t stop talking about growth, it’s an odd way to treat the very people who deliver it. HMRC data shows a 45% jump in claimants to 61,000, and a 67% surge in realised gains ahead of previous rate changes tells its own story: when tax hikes loom, owners accelerate timelines to lock in higher net proceeds.
“Transaction activity spikes as sellers compress deal cycles to beat the cut-off. Advisory conversations bear this out, with more owners re-running sale timing and cash-flow models to see whether bringing an exit forward stacks up before further relief erosion eats into net returns.”
Harvey Dhillon, Founder & CEO at Zmartly, said it is ordinary business owners rather than wealthy people cashing out.
He added: “BADR is already at 18%, and the main lower rate of Capital Gains Tax is also 18%. So for an owner whose gain sits in the basic rate band, the relief is now worth nothing. For a higher rate taxpayer, it saves six percentage points against 24%. Moving it to 20% would not align BADR with the lower rate, it would put it above.
“So the argument is over the last few points of a relief that has already mostly gone. 61,000 claimants on £18.4 billion is an average gain of about £302,000, well under the £1 million lifetime limit. These are not wealthy people cashing out, they are ordinary business owners.
“And anyone who has already used their £1 million has no relief left at all, so the rate makes no difference to them either.
“Most owner-managed companies are never sold in any case, because there is no buyer for them. The exit is closing the company down. A strike-off only gets capital treatment on the first £25,000, and anything above that is taxed as income.”
