A south coast legal firm is gearing up for a deluge of instructions as business owners race to beat an imminent tax deadline.
Company law experts at Ellis Jones Solicitors already report a heightened case load ahead of looming changes to Capital Gains Tax (CGT) and expect the rush to intensify. It follows the reduction of Business Asset Disposal Relief (BADR), previously Entrepreneurs’ Relief, due to take effect from 6 April 2025.
Until now, thanks to BADR, the sale, disposal or transfer of ‘qualifying business assets’ such as company shares has attracted a lower CGT rate of 10% on the first £1 million of gains.
But from 6 April, under changes announced in the Budget, the rate will go up to 14%. A year later, in April 2026, it will rise again to 18%.
Missing out on the 10% relief will affect many smaller, owner-managed businesses where owners and directors are looking to sell up, for example to finance retirement plans.
Neil Cook, Partner & Head of Business Services at Ellis Jones, says the reduction of BADR will hit many business owners looking to exit through a sale. Neil said:
“Under BADR now, if you have a £1 million gain from a qualifying business asset you want to dispose of, the 10% rate means you pay £100,000 in CGT. Following the Chancellor’s announcement, if the transaction completes after 6 April 2025, you will pay 14%, so £140,000, an increase of £40,000."
“If you’re looking at a sale after 6 April 2026, it will be £180,000, so an extra £80,000 compared to now. Such additional tax liabilities will make a massive difference to people. In the run-up to the Budget last October, we were inundated with enquiries and instructions from business owners desperate to see deals completed before it was too late."
“That was because of fears the Chancellor might have abolished or reduced BADR or increased headline rates of CGT there and then. We were working around the clock last October as we did our best to help clients seal their deals."
“With the 6 April deadline now just a few weeks away, the rush has started again. We’ve had instructions on multiple deals in the past ten days or so and we are gearing up for a high level of work through the rest of February and right up to the end of March."
“Many clients in the small business community have pinned their retirement plans on the expectation of paying a certain level of CGT but could now end up in a situation where they will be tens of thousands of pounds worse off if they don’t act immediately.”
Neil said his team were “well placed and have plenty of capacity” to help clients worried about the BADR change, adding that business owners should always consult a tax expert or accountant for the best tax advice concerning CGT and all tax matters.
Members of Ellis Jones’ Business Services department work from the independent law firm’s offices in Dorset and London.
