Planning an Exit? The Right Timing Could Leave You Better Off

Tax rates are changing. If you are thinking about selling your business, the timing can significantly impact the net proceeds shareholders receive. With the UK government set to increase the Business Asset Disposal Relief (BADR) rate from 14% to 18% in April 2026, business owners planning an exit should carefully consider whether to sell before or after this change. 

Martin Brown, our CEO, explores a real-world example to illustrate the financial implications of selling a business in November 2025 versus June 2026. 

 

The Scenario 

• Sale Price: £6,000,000
• Shareholders: Two individuals, each owning 50%
• Shareholding Duration: 5 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
• BADR Allowance: £1,000,000 per shareholder
• CGT Rates:

                                Nov 2025: 14% on BADR, 24% on remaining gains 

                                June 2026: 18% on BADR, 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 for both = £1,240,000

Step 3: Final Net Proceeds £5,665,000 – £1,240,000 = £4,425,000 Each shareholder receives: £2,212,500 

 

June 2026 Sale: Higher BADR Rate 

Step 1: Net Proceeds Before Tax Same as above: £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 for both = £1,320,000

Step 3: Final Net Proceeds £5,665,000 – £1,320,000 = £4,345,000 Each shareholder receives: £2,172,500 

 

Side-by-Side Comparison 

Metric	Nov 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

  

Timing matters 

Selling the business in November 2025 results in £80,000 more in net proceeds compared to selling in June 2026, due to the lower BADR rate of 14%. Each shareholder would personally retain £40,000 more by selling before the April 2026 tax change. 

While the difference may not be transformative, it’s certainly meaningful especially for shareholders looking to maximise post-sale returns. If your business is ready for sale and you qualify for BADR, completing the transaction before the rate increase could be a financially prudent move. 

However, timing should also consider market conditions, buyer readiness, and strategic goals. Tax efficiency is important, but it’s just one factor in a successful exit strategy.  We’re doing more and more calculations at the moment, analysing the impact of forthcoming changes to help business owners understand what it means for them.  Our work with business owners over the years has shown us just how different each sale can be and the importance of a bespoke strategy for each business and even each owner.  

With the next budget pending, what is your business’s value and how do you realise it or grow it?  The herd can help you review your options and work with you on these calculations. Get in touch to find out more.