Capital Gains Tax uncertainty: why early exit planning matters

Since Andy Burnahm became Prime Minister, speculation around increased rates of Capital Gains Tax has intensified. While no confirmed policy change has been announced and any potential reforms remain uncertain, this is a timely reminder that exit planning is rarely something that can be dealt with at short notice.

Whether or not tax changes ultimately materialise, understanding your current position and available options can help preserve flexibility and avoid decisions being made under pressure.

A familiar question for business owners

Capital Gains Tax (CGT) is often a key factor when selling shares, transferring ownership or passing value to the next generation. CGT can apply to disposals of assets including shares, land and intellectual property and the rules can involve different reliefs, rates and reporting requirements depending on the circumstances.

Why speculation still matters

Recent commentary has focused on whether CGT rates - currently 24% for higher rate tax payers and 18% for basic rate tax payers - could move closer to income tax rates or whether existing reliefs could be revisited.

While there is no certainty that any such changes will occur, and it would be unwise to make major commercial or personal decisions solely on the basis of political commentary, uncertainty can provide a useful prompt to revisit existing plans. For many owners, the value built up in a company represents years of risk, reinvestment and personal commitment. A change in the tax treatment of a disposal could therefore have a significant impact on the net proceeds available after a sale.

Business sales take time

A well-managed sale process rarely happens quickly. Preparing the business for market, understanding valuation expectations, identifying potential buyers, agreeing heads of terms, completing due diligence and finalising legal documentation can take many months. Where succession, a management buy-out, employee ownership or a third-party sale is already on the horizon, waiting for certainty may leave limited time to respond.

The key point is not to act on speculation, but to prepare. This will ensure that, if the tax landscape changes, you have already done enough groundwork to make informed decisions.

What should owners be reviewing?

If you are already considering an exit, the first step is to understand the current position. This may include reviewing shareholder objectives, indicative valuation, likely buyer appetite, available CGT reliefs, possible transaction structures and the practical timetable for completion. It may also be worth considering whether the business is genuinely sale-ready, or whether further work is needed before approaching the market.

This does not commit you to selling. Instead, it provides clarity. If the current tax position remains unchanged, the review can still support good succession and strategic planning. If changes are announced, you will be better placed to consider whether accelerating, reshaping or pausing a transaction is the right commercial response.

Turning uncertainty into a planning opportunity

If you expect to sell within the next 12 to 24 months, uncertainty around CGT should not be overlooked. Seeking advice early can help identify the areas within the owner’s control, including timing, structure, relief availability, transaction readiness and personal objectives. It can also reduce the risk of making significant decisions against a compressed timetable.

Review your position

If a sale, succession plan or shareholder exit is already under consideration, now may be an appropriate time to review the likely tax position and transaction timetable. The aim is not to force a decision, but to make sure the decision remains in your hands.

If you are considering an exit, or want to understand how future tax changes could affect your plans, an early conversation can help you approach the next stage with greater confidence. Armstrong Watson works with business owners on Capital Gains Tax planning, business disposals, succession options and transaction readiness. For further advice and support, please get in touch on 0808 144 5575 or email help@armstrongwatson.co.uk.