Timing a business sale: Is now the right time? Recent tax hikes on the sale of companies have left many entrepreneurs reeling. One client told us, “I’m not selling — I’m going to wait until Labour are out in four years’ time and the CGT increase is reversed.” Another asked, “Are they targeting me?”
With these thoughts in mind, we felt it was worth making a broader comment.
Firstly, regardless of your political stance, there is no guarantee that Labour will lose the next election. In times of uncertainty, electorates tend to vote for stability, and Labour will argue they are providing just that. Secondly, and perhaps more crucially, even if there is a change in government, we are not convinced that Capital Gains Tax (“CGT”) rates will be reversed. These changes are effectively a form of wealth tax, and due to the ongoing strain on public finances, taxing the wealthy remains the path of least resistance. It is politically palatable as a relatively small group, who also happen to hold a disproportionate amount of capital, are easier to tax than the broader electorate.
Timing a Business Sale
So, what should drive the timing of a business sale? While tax matters, and of course it does, it should not be the sole or even dominant consideration. Instead, focus on the real questions: Is this the right time for me personally? Is it the right time for the business? Can I achieve strong value in the market right now and who can best help me secure that? These are the factors that should take centre stage.
Paying tax is rarely joyful, but it is a contribution to the system that enabled your success and there is pride in that. The more relevant question is not how much tax you will pay, but What is left over? and What will you do with it?
Tax Happiness Equation
Start by calculating your net proceeds after all taxes and deal costs. Then consider what do you really want that money to do for you? In the current climate, high-tax, capital-hungry lifestyle choices (like holiday homes, yachts, or multi-residence portfolios) may have lost some of their shine. The shift for many sellers now is from “owning more” to “doing more”.
This is where the Tax Happiness Equation starts to change. For some, it might look like this:
Sell well → Invest tax-efficiently → Own less → Live more.
By embracing a post-sale lifestyle focused on experiences, travel, passion projects, or philanthropy, you not only sidestep some of the friction of traditional high-cost wealth deployment — you also avoid compounding your tax exposure.
This is where Inheritance Tax (“IHT”) enters the equation. From April 2026, proceeds from a business sale above the first £1 million will be taxed at 24%. But if, after paying that, your estate is still above the IHT threshold, you may simply be swapping one tax bill, CGT, for another (IHT at 40%). It is also worth noting that some accountants still think CGT should be 40% in line with income tax. This is when reframing spending as early legacy or experience investment comes into play: every pound spent on meaningful living is arguably 40% cheaper, because it reduces your taxable estate.
One of our clients took this to heart — he bought a Lamborghini, justifying it as a post-sale “experience spend” and reward. A note of caution, however: gullwing doors and a bad back in a supermarket car park can be a dangerous combination!
In the end, if you can align the right time for you with the right time for your business, that is usually when the magic happens. Tax should inform your strategy but it should not dictate your destiny.
That is the real Tax Happiness Equation to timing a business sale.
Contact us
If you would like more information about our services or case studies on our recent M&A deals, please visit our website at https://avondale.co.uk. Alternatively, if you would like a free consultation with one of Avondale’s experienced M&A advisors, please call us at +44 (0)1737 240888, email us at av@avondale.co.uk, or fill out the attached form, and we will get in touch straight away.
This article has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for any specific tax, legal or accounting advice. Regulated advice bespoke to your circumstances is essential.
