The October 2024 UK budget marked a pivotal moment for business owners and entrepreneurs planning an exit. With Labour’s new government introducing sweeping tax reforms (particularly targeting Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR)) the rules of the game have changed. For many founders, these changes have made proactive exit planning, timing, and deal structuring more important than ever.

If you’re considering selling your business, understanding the impact of these tax reforms is essential. Here’s what you need to know, with practical steps you can take to navigate this new landscape, drawn from the latest market trends and insights from The Exit Roadmap by Chris Spratling.

1. What’s Changed Since the October 2024 Budget?

The Labour government’s first budget brought significant tax increases and tightened reliefs, including:

– Higher CGT rates for higher-rate taxpayers, bringing them much closer to income tax levels.

– Reduced generosity of BADR (formerly Entrepreneurs’ Relief), with both lower lifetime allowances and higher rates on qualifying gains.

– Increased HMRC scrutiny on transaction structures, relief claims, and valuation methods.

These changes were designed to raise revenue, but they’ve had an immediate effect on how (and when) entrepreneurs choose to sell.

2. How Are Entrepreneurs Responding?

A. Accelerated Exits Before Further Increases

With more tax changes anticipated for April 2025 and beyond, many entrepreneurs have accelerated their sale timelines to lock in current rates before they rise again.

Trend: A spike in deal completions in late 2024 and Q1 2025 as founders seek to “beat the clock.”

B. Growing Interest in Alternative Exit Structures

Labour’s reforms have driven increased interest in Employee Ownership Trusts (EOTs), which remain highly tax-efficient (with full CGT relief if structured properly).

Trend: More business owners are considering EOTs, not just for the tax benefits, but to preserve their company’s culture and legacy.

C. Sophisticated Deal Structuring

Buyers and sellers are getting creative. Deferred consideration, earn-outs, and share-for-share exchanges are being used to manage upfront tax liabilities and spread risk.

Trend: Deal terms are becoming more complex as both parties aim to optimise tax outcomes.

3. What Are the Key Risks Under Labour’s Tax Reforms?

– Higher overall tax bills for most entrepreneurs, potentially reducing net proceeds from a sale.

– Loss of eligibility for BADR due to stricter qualification rules or missed planning opportunities.

– Greater scrutiny and longer timelines during HMRC reviews of sale structures and relief claims.

4. What Should Entrepreneurs Do Now?

A. Start Planning Early

Early planning is essential. Waiting until you receive an offer is too late. Review your eligibility for BADR, EOTs, and other reliefs at least 12–24 months before your intended sale.

B. Revisit Your Exit Strategy

Consider all exit options: trade sale, management buyout, EOT, or even staged sales, to optimise both value and tax.

C. Invest in Specialist Advice

With more complexity and higher stakes, working with experienced advisors (corporate finance, legal, tax) is no longer optional. They can help you:

– Structure the deal tax-efficiently

– Prepare robust documentation for HMRC

– Navigate post-budget uncertainties

D. Benchmark Your Readiness

Take advantage of tools like our Exit Readiness Survey to identify gaps and opportunities for improvement before going to market.

5. What Does the Future Hold?

The landscape is still evolving. Labour’s budget signalled a tougher stance on entrepreneurial gains, and more reforms are possible. Smart founders are staying agile, revisiting their exit plans, and focusing on building value that will stand up to higher taxes and tougher due diligence.

Final Thoughts: Preparation is Power in the New Tax Era

Labour’s October 2024 budget has ushered in a new era of exit planning. By staying informed, planning early, and working with trusted advisors, you can still achieve a successful and rewarding exit, even in a tougher tax environment.

Your Exit Starts Here

If you’re wondering whether you’re truly ready to sell, don’t leave it to chance. Take the Exit Readiness Survey today at www.chalkhillblue.org/exitreadiness-survey and get a clear picture of where you stand, and what to do next.

Looking for the complete roadmap to a successful exit? Order The Exit Roadmap by Chris Spratling on Amazon – a practical, step-by-step guide for ambitious entrepreneurs ready to maximise value, minimise stress, and exit on their own terms.

For more insights and real-world advice, follow Chris Spratling on LinkedIn. Start your journey to a successful exit with clarity and confidence.