Every year, during the course of the summer, the same conversation starts. A media source reports that the Treasury is looking at capital gains tax, or that a relief is under review. Within a fortnight, owners who were comfortable with their plans earlier in the year are calling us to ask whether they should act before the autumn. Our advice is usually the same: make the decision on its own merits, not on a rumour.
It’s tempting to blame the current government, but anyone who has advised owners for more than a few years will recognise the pattern. In summer 2020, the then Chancellor asked the Office of Tax Simplification to review capital gains tax. Its report suggested aligning rates with income tax could raise around £14bn, and the speculation ran for months. Plenty of owners brought sales forward because of it. The March 2021 Budget left capital gains tax alone.
Sometimes the speculation is right: rates did indeed rise in October 2024. However, even announced policies can move. The same Budget capped business property relief at £1m, and 14 months later the cap was raised to £2.5m before it had even taken effect. If firm announcements shift like that, planning around a rumour is harder still. Either way, the activity it prompts is real. HMRC’s figures for 2024/25 show capital gains tax liabilities of £24.2bn, up 89% on the previous year, from 584,000 taxpayers. HMRC puts a good part of that down to people selling ahead of expected changes, and that is not a pattern that can repeat indefinitely.
Selling early has a cost
A business taken to market before it’s ready may not have the strategic plan, the trading record, the management depth or the quality of information a buyer pays a premium for. An owner working to the Chancellor’s timetable rather than their own has given away part of their negotiating position before the first meeting. The bigger problem is that the timetable isn’t the seller’s to set. Diligence is more searching than it used to be. Funding takes longer to agree. More of the price is deferred or tied to future performance than a few years ago. A process can slow for reasons that have nothing to do with the seller, and there’s often no way to expedite it. An owner who decides in the summer to complete by the end of October is making a promise that only the buyer, their lenders and their investment committee can keep.
What to do with the noise
None of this means ignoring what’s being said. Separate the decisions that stand up on their own from the ones that only make sense if a rumour comes true. If you were thinking of selling in two or three years, that decision has very little to do with October. If you weren’t planning to sell at all, a Budget is a thin reason to start. And if you’re close to a decision, tax is one input among several. It’s rarely the one that decides whether the deal is a good one.
We can’t predict the Budget any better than anyone else, but we can usually tell you whether it would matter.
That conversation works best when nothing is forcing it. The speculation won’t stop. We’ve had eight Chancellors since 2019 and the same conversation has outlasted all of them. What changes is whether an owner is deciding from a position of preparation, or a few months out from a Budget they can’t influence. Getting a business ready for sale often takes a couple of years, not a couple of months. That means setting and demonstrating a strategic growth plan, improving management information, making the business less dependent on those who are seeking to step back or away, and dealing with the things a buyer will find before they find them. None of that work is wasted if you decide not to sell. We’d much rather talk to someone three years early than three weeks late. It’s a more useful conversation for everyone.
If you’d like to chat to someone about your options email Andy.Miller@sentiopartners.co.uk
