Budget speculation puts capital gains tax back in focus for business owners

Recent political commentary and reports of support among some Labour MPs for higher taxes on wealth have once again brought capital gains tax (CGT) into the spotlight. While there has been no announcement of changes to CGT rates, and no one can say with certainty what will happen in the autumn Budget, business owners concerned about their tax exposure should be aware of the risk of increases and plan ahead. 

For many entrepreneurs, the most valuable asset they own is not their house, investment portfolio or pension. It is the shareholding in their business. As a result, even relatively modest changes to CGT can have a significant impact on personal wealth when a transaction completes.  

Furthermore, with the business property relief (BPR) changes from the 2024 Budget now in effect, we recommend extending the discussion to include succession planning and family wealth preservation. 

Encouragingly, with the early announcement of the 2026 Budget date on Wednesday 28 October, shareholders have been given a small, but sufficient, window of opportunity to consider their options and act. 

What could a change mean in practice? 

While it is impossible to predict what, if any, changes might be introduced, even a relatively modest increase in tax rates could have a significant impact.  

At current rates, a sole shareholder, with a minimal base cost, disposing of a business for £10m could expect to retain c.£7.7m after tax. The illustration below highlights what the impact could be if CGT is aligned with a higher rate of income tax at 45% (and assuming business asset disposal relief (BADR) is retained): 

 The additional tax in this scenario is almost £2m, from exactly the same transaction.   

This isn’t just a CGT discussion 

Many business owners are already considering similar questions for a different reason. The changes to BPR for inheritance tax (IHT) in the 2024 Budget, which took effect from the April 2026, have prompted many shareholders to review how their wealth is structured and how future tax risks might be managed. For owner-managed businesses, there is often a significant concentration of wealth in a single asset: the business itself. As a result, we are seeing that discussions which started with IHT planning are increasingly widening into broader discussions around family wealth, succession planning and ownership structures. 

Understanding the options is critical 

The appropriate course of action will vary depending on a shareholder’s circumstances, future plans and appetite for risk. However, waiting until after a Budget announcement may limit the options available. There are a range of transaction, planning and structuring options that may help. These include some – such as management buyouts, often discounted due to the common misconception of “management not being able to afford it” – which may be less obvious. 

The key point is not to rush into decisions. Understanding the options available, to support informed decisions, is becoming more important than ever, whatever direction future tax policy takes. Whilst we do not advocate rushing into any decision, it is really important to start those conversations early to consider whether early action is recommended. 

Support from PKF Francis Clark 

As the region’s most active corporate finance team for more than a decade, we have the skills and experience to support you in planning for the future. We are already helping shareholders and management teams understand the potential impacts and opportunities. 

Whether you are considering a transaction in the near term or simply reviewing your succession and estate planning arrangements, now is an appropriate time to take stock.