What SME business owners thinking about selling their businesses need to know

With the next increase to capital gains tax (CGT) rates due to take place in April 2026, many SME business owners are starting to reconsider the timing of their exit plans given that selling now could offer significant financial advantages.

What are the CGT tax changes from April 2026?

From 6 April 2026, the CGT rate applying to qualifying business disposals is set to increase again from 14% to 18%, following a previous increase from 10% in October 2024.

These changes could mean a substantial reduction in the net proceeds received by SME business owners when selling their companies, which could make an exit much less attractive.

Indeed, it appears that many are fast-forwarding their exit plans, as a recent report indicated that the last quarter of 2024 showed a notable increase in M&A activity, with a reported 7,492 business sales completed, (which was up 11% from the same period in the previous year).

There also appears to be some evidence to suggest that the increased activity may also have had a positive impact on business valuations meaning sellers are able to negotiate better terms, (not just in terms of price but also in earnouts, retention packages, and overall deal structure), and that small business owners are seeing valuation multiples rise as investor confidence grows.

But valuing a business for exit requires proper expertise, and for those thinking about selling, this is often the first critical step in the process towards their exit, and something that ETC Tax have lots of experience in.

Why advance planning for a sale really matters

Beyond tax considerations, planning early enough allows business owners to properly plan legal and financial considerations, think about operational changes and staff communication, and review historic risks.

Pre-sale tax health checks – which happen to be another service we offer – can also help ensure that there are no nasty surprises.

Are you considering selling your business?

According to various recent studies, figures suggest that 60%-70% of SME business owners might now be exploring the idea of a sale or exit, whether by way of EOT, MBO, trade sale or some other means.

Whilst this is likely to be driven by a myriad of factors like environmental, HR, and regulatory changes, the CGT tax changes certainly won’t have helped,

Contact ETC Tax

So, if you’re one of those SME business owners who is considering selling your business, please get in touch. We’d be happy to help.

Next Steps

Whether you need guidance on the timing of a sale, valuation matters, a pre-sale tax health check, or advice on pre-sale structuring, contact us at mailto:enquiries@etctax.co.uk and we can help guide you through the process.