Business owners across the UK are being urged to begin preparations for a sale much earlier than they might think, as a significant change to a key tax relief scheme creates a potential financial race against the clock.
The Looming Tax Change: A Four-Point Hike
The catalyst for this urgent advice is a confirmed alteration to Business Asset Disposal Relief (BADR). Currently, BADR reduces the rate of Capital Gains Tax (CGT) for eligible business owners when they sell their company. However, from April 2026, the relief rate will increase from 14 per cent to 18 per cent.
While a four percentage point shift may seem minor, the real-world financial impact is substantial. For an entrepreneur selling a business valued at approximately £1 million, even a slight delay that pushes completion past the April 2026 deadline could result in an additional tax liability running into tens of thousands of pounds.
Why Business Sales Take Longer Than You Think
The critical problem facing sellers is the inherently lengthy and complex nature of business transactions. James Howell, Managing Director at corporate law firm Rubric Law, highlights a common misconception. "One of the biggest misconceptions sellers have is that a business sale is simply a negotiation on price," he states.
In reality, a typical deal can take 6 to 12 months from initial discussions to final completion. This timeline is often dictated by procedural mechanics rather than price haggling. The journey is frequently hampered by several common choke points:
- Extensive due diligence processes.
- Intellectual property (IP) audits.
- Slow decision-making from buyers or their lenders.
- Last-minute negotiations on warranties and indemnities.
Howell identifies specific recurring issues that cause major delays. "At Rubric Law, we consistently see transactions stall due to property-related complications," he explains. Problems like outdated leases, missing landlord consents, or defective historical documentation can add significant, costly time.
Financial due diligence is another major pressure point. "If a business has incomplete, inconsistent, or poorly organised accounts, buyers will naturally raise more questions," says Howell. This scrutiny prolongs the sale and often leads to stricter terms or price reductions.
The Essential Preparation Window
To navigate these pitfalls and gain control over the sale timeline, experts are issuing clear guidance. "As a rule of thumb, owners planning to sell should begin preparing 3–6 months before going to market," advises Howell.
This preparation buffer allows sellers to proactively address the typical blockers that derail deals. Key preparatory steps include:
- Organising and streamlining financial records.
- Ensuring full regulatory and tax compliance.
- Reviewing and tidying employment contracts and commercial agreements.
- Resolving any property or asset ownership issues.
"The time required to address these challenges, even if only a matter of weeks, can materially impact when completion occurs and could, in some cases, push a seller into a less favourable tax position," Howell warns.
For any business owner contemplating an exit within the next 12-18 months, this preparation is no longer optional. "An up-to-date valuation and properly organised financial and operational records are no longer ‘nice to haves’; they are essential," he concludes. Being sale-ready not only smooths the process but can directly influence the final sale price and the amount of tax paid to HMRC.
