Autumn Budget 2024: Increases to Capital Gains Tax and Business Asset Disposal Relief rates – is it time to sell?

For business owners who have been contemplating selling in the next few years, the Chancellor has just announced in the Autumn Budget some key dates and changes that would be prudent to consider. 

Currently, the main rates of Capital Gains Tax (CGT) that apply to assets - other than residential property and carried interest - are 10% for any gains that fall within an individual’s unused basic rate band, and 20% for higher-rate taxpayers. For disposals of business assets made on or after 30 October 2024, CGT rates will increase to 18% and 24% respectively. 

The rate for Business Asset Disposal Relief (formerly Entrepreneur’s Relief) and Investors' Relief (currently 10%) will increase to 14% from 6 April 2025 and 18% from 6 April 2026. Further, the lifetime limit for Investors’ Relief will be reduced to £1m for all qualifying disposals made on or after 30 October 2024, bringing it into line with the lifetime limit for Business Asset Disposal Relief.

While the rate of CGT for the disposal of business assets has gone up immediately, the rise is less than some feared or predicted. We therefore take the view that M&A activity is likely to remain largely unaffected by these changes and, indeed, for smaller businesses, activity may rise before the end of the tax year as sellers and buyers alike make the most of the unexpected longer period before the increases in rates for Business Asset Disposal Relief and Investors' Relief take effect.  

Whether you are a business owner or potential buyer, if you are considering your options in the lead up to April 2025, please get in touch with a member of our Corporate Team to discuss.