Many business owners are asking us the same question right now. If I sell my company, how much tax will I actually have to pay? And how will that be changing next year?
So, here is the simple, current picture.
The Old Regime: 10% on Up to £10m which is no longer available
For many years, the well know friend called “Entrepreneurs’ Relief” allowed most business owners to sell their company and pay 10% tax on up to £10m of gains. This ended in 2020.
Today’s Rules
Business Asset Disposal Relief (BADR) still gives a 10% rate, but only on the first £1m of lifetime gains. Everything above £1m is normally taxed at 20% for higher-rate taxpayers.
For example, with a £3m gain today, a typical founder pays around £500k in Capital Gains Tax.
What Happens in April 2026?
The Government has signalled a move towards higher CGT rates from April 2026. BADR is expected to stay at 10% on £1m, but the rate above that is expected to rise. Based on current Government direction, most advisers are planning around a 28%+ rate for business shares.
For many owners, this means a materially higher tax bill.
Why Owners Are Worried
Even before any changes in this November Budget, the 2026 increase was already in motion. It means:
- sales completed in 2026 may trigger significantly higher tax
- deals may take months to prepare and execute
- reorganisation and shareholder changes need to be handled carefully
- selling in 2025 vs 2026 can make a six-figure difference
For example, on that same £3m gain as shown before, moving from 20% to 28% adds around £160k in extra tax.
If You Are Considering a Sale
So, if you are considering your options, and a sale is one of them, now is the time to review:
- whether you qualify fully for BADR
- how your company would be valued
- whether the business is ready for buyer due diligence
- whether a sale in late 2025 is more tax-efficient than one in 2026
- what performance improvements could increase valuation before sale
Clear preparation can materially reduce tax leakage and improve outcomes.
Thinking about a sale or exploring your options?
Mercury Finance helps owners understand their valuation, tax position, and strategic options before they engage brokers or buyers. Contact Mercury Finance for a confidential conversation.