If you have spent years building your business, you likely have one eye on the eventual exit. For a long time, the "reward" for that hard work was Business Asset Disposal Relief (BADR)—formerly known as Entrepreneurs’ Relief—which allowed you to pay a significantly reduced rate of Capital Gains Tax (CGT) when you finally sold up.

However, the "tax cost" of retiring or selling your company is on the rise. Following a staged increase, we are approaching the final jump in the 2026/27 tax year. At CoreAcc Accountants, we are advising clients that if an exit is on the horizon, the timing of your deal has never been more critical.

The New Math: From 14% to 18%

From 6 April 2026, the tax rate for qualifying gains under BADR will increase to 18%. To put this in perspective, look at how quickly the landscape has shifted:

● Pre-April 2025: 10%

● Current Rate (2025/26): 14%

● From 6 April 2026: 18%

While 18% is still lower than the standard 24% CGT rate for higher-rate taxpayers, the gap is narrowing. On a maximum qualifying gain of £1 million, a business owner selling after April 2026 will pay £180,000 in tax—that is £40,000 more than someone selling today, and double what it would have cost just two years ago.

Key Rules That Haven't Changed (But Still Trip People Up)

While the rate is going up, the core eligibility rules remain strict. To qualify for the 18% rate(rather than the full 24%), you usually need to meet these criteria for at least two years leading up to the sale:

● The 5% Rule: You must hold at least 5% of the ordinary share capital and 5% of the voting rights.

● Economic Interest: You must be entitled to at least 5% of the profits available for distribution and 5% of the assets in a winding-up.

● Employee/Officer Status: You must be an officer (director) or an employee of the company.

● Trading Status: The company must be a trading company or the holding company of a trading group.

The "Anti-Forestalling" Trap

You might be thinking: "I’ll just sign a contract on 5 April 2026 and complete the sale later to lock in the 14% rate."

HMRC is one step ahead. Specific anti-forestalling rules are in place to prevent people from using unconditional contracts to "lock in" an old tax rate if the actual completion of the sale happens after the rate change. Unless you can prove the contract wasn't created purely for a tax advantage, the date that matters is the date the deal actually crosses the finish line.

Is a Members’ Voluntary Liquidation (MVL) the Answer?

If you aren't selling to a third party but are simply looking to close your company and extract the cash, a Members’ Voluntary Liquidation (MVL) is often the most tax-efficient route. This allows the remaining profit to be treated as a capital gain (qualifying for BADR) rather than an income dividend.

With the rate rising to 18% in April 2026, many directors are choosing to start the MVL process now. This ensures that the liquidator can make the final distributions before the higher tax rate kicks in.

How CoreAcc Accountants Can Help

An exit strategy isn't something you should pull together in the final weeks before a sale. It requires long-term planning to ensure you don't accidentally disqualify yourself from relief. CoreAcc Accountants can support you with:

● Eligibility Health Checks: We will review your shareholding and employment status to ensure you hit the two-year qualifying "clock" before you find a buyer.

● Tax Modelling: We’ll show you the exact "net" difference in your pocket if you sell before or after the April 2026 deadline.

● MVL Coordination: If you are closing your business, we work alongside licensed insolvency practitioners to ensure your capital distributions are timed perfectly for the best tax result.

● Structuring Advice: From Earn-outs to deferred consideration, we ensure the structure of your deal doesn't lead to an unexpected tax headache.

Get in Touch

The window to lock in the 14% rate is closing. If you are considering an exit in 2026 or 2027, speak to the team at CoreAcc Accountants today to ensure you keep as much of your hard-earned value as possible.

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