BUSINESS owners who have sacrificed blood, sweat and tears to grow successful enterprises face unthinkable tax bills when they come to sell unless they take action now.
That’s the message from a leading accountant who says further changes to Business Asset Disposal Relief (BADR) will create serious tax liabilities for hard‑working entrepreneurs who fail to plan ahead.
Paul Hornby, Managing Director of JF Hornby & Co, warned that thousands of owners could be caught off‑guard by steep increases to the tax rate payable on the sale of a business.
Warning: Hornby’s MD, Paul Hornby
“Business Asset Disposal Relief used to be incredibly valuable for people who had put everything into building a business,” he said.
“But the new landscape is far more punitive. People who expect a life‑changing lump sum could instead face six‑figure tax bills. It’s unthinkable – and entirely avoidable with proper planning.”
For more than a decade, BADR (formerly Entrepreneurs’ Relief) offered a preferential 10 per cent Capital Gains Tax rate on the first £1m of qualifying lifetime gains. However, the tax environment is tightening sharply.
The 10 per cent rate ended in April 2025, rising to 14 per cent from 6 April 2025. It will rise again to 18 per cent for all qualifying disposals made on or after 6 April 2026.
The £1m lifetime limit remains unchanged.
Paul said the staged increases mean business owners could lose tens of thousands of pounds – and in many cases, more – by failing to plan their business disposal effectively.
“Someone selling a business with a £1m gain will pay £40,000 more tax if they complete after April 2026 compared to before it,” he said.
“That’s a huge difference for anyone – and even larger businesses will be hit much harder because the lifetime allowance is not budging, despite the upwards trajectory of everything else.
“But it does not have to be that way. There are various ways of structuring a business if a sale is on the horizon that can protect the proceeds.
“There are many legitimate ways to box clever. Restructuring shareholdings, adjusting ownership, rethinking how value is extracted, or even altering the timing of a sale can all make a material difference.
“But these options only exist if people act early. Leaving it until the deal is on the table is far too late.”
Paul urged owners to recognise the seriousness of the impending change.
“The new BADR regime will catch people out,” he said. “If you do nothing, you’ll almost certainly pay more tax than you need to.
“But if you act now – even if you aren’t planning to sell for a couple of years – you can still secure the outcome you deserve.”
