If you’re thinking about exiting a business before 2026, you’ll need to consider much more than just minimising tax on sale. Business exit planning needs to cover a range of financial decisions, from post-sale planning to Inheritance tax (IHT) changes, income needs, and portfolio structuring. Your post‑sale balance sheet needs to meet your income needs and protect your family, while navigating tighter IHT and capital gains tax (CGT) rules coming in April 2026. We look at what you need to know if you’re looking to exit your business.
Post‑sale priorities for 2025 business exits
If you’re looking to sell a multi‑million‑pound business, you’ll need a coordinated approach. Instead of solely focusing on tax efficiencies, you’ll also need to consider post‑sale cash, investment risk, Business Relief (BR)-qualifying assets and intergenerational wealth transfers.
In the Autumn Budget 2025, there were also changes to the capital gains tax (CGT) Business Asset Disposal Relief rate, which will rise from 14% to 18% from April 2026.
A typical question is “How do I minimise CGT on exit?” However, it’s also important to ask, “What will this capital look like on my death, and how do I live off it meanwhile?”
It’s essential to make decisions around how much cash is needed to fund your current lifestyle, while considering long‑term, growth‑oriented investment portfolios. Also, consider how to move surplus wealth out of your taxable estate before the 2026 IHT changes.
For one of our clients, their challenge was to balance a large new IHT exposure on business sale proceeds with an appetite for higher‑risk, BR‑qualifying investments. They also wanted to pass on significant wealth to their children, ensuring they could still fund their lifestyle. One concern was the impact of moving into higher and additional‑rate income tax bands. This is a common scenario which requires a strategic approach for business sale.
IHT strategy before and after 2026
From April 2026, Business Relief will be capped at £1 million of qualifying assets at 100% relief per individual. Amounts above this typically attract 50% relief and are therefore an effective 20% IHT rate. So, early 2026 is a critical window for owners expecting large business exits. You’ll need a robust business financial planning strategy.
Post‑sale, your focus should shift to reducing IHT. As an example, you could consider gifting or structures with BR‑qualifying investments where the risk profile is acceptable.
CGT decisions pre‑ and post‑sale
Business owners selling shares or business assets should consider the interaction between Capital Gains Tax and Business Asset Disposal Relief (BADR), especially given the rate rises. Bringing the sale forward might help to maximise BADR within the £1 million lifetime limit, but you will need to consider how this is structured. You might be able to materially reduce CGT and create more flexibility for later IHT and income planning.
After the sale, you’ll need to consider how to reinvest your sale proceeds into growth assets that will generate future gains. So, ongoing CGT management will be needed, making use of available allowances and a strategy for disposals.
Passing wealth to children
For high‑value business exits, your post‑sale estate can easily exceed IHT thresholds even after BR and spousal exemptions. You’ll need to make decisions around how much wealth you can transfer to children and what routes to take. You’ll also need to be aware of the seven‑year gifting rule, Potentially Exempt Transfer (PET) and the taper relief sliding scale.
What qualifies for Business Relief?
Business Relief applies to qualifying interests in trading businesses, shares in unlisted trading companies and certain AIM‑listed shares that meet HMRC conditions. Despite the cap, the rules around qualifying trades, ownership periods (typically two years) and exclusions for mainly investment businesses are expected to remain into 2026.
Can you still claim Business Relief after a business sale?
Once a trading business is sold and proceeds are held as cash or in a standard investment portfolio, the assets no longer qualify for BR. However, a seller can reintroduce BR into their estate planning by reinvesting part of the proceeds into BR‑qualifying investments. This could include interests in qualifying trading companies or certain specialist BR services. This would be subject to the two‑year ownership rules and the new caps from April 2026.
How do I claim Business Relief on investments after I sell my business?
For BR on post‑sale investments, you’ll need to ensure your chosen investments meet HMRC’s qualifying criteria. They need to be held for the minimum required period (usually two years) at death or transfer.
Some high‑net‑worth sellers use specialist BR portfolios or qualifying private company shares, but these need to be managed carefully. It’s advisable to align a BR strategy with your wider IHT planning, income needs, and the £1 million cap. BR should be more of a supporting tool rather than the sole focus of your business exit strategy.
Selling a business and financial advice, Nottingham and Derby
At Balance: Wealth Planning, our experienced financial planners work closely with business owners and directors to help plan a business sale or exit. Our team will advise you on how to structure your drawings, so you can make the most of available tax allowances. If you have commercial property and/or assets, we’ll talk you through your options. We can help you structure a business sale and invest the sale proceeds in a sensible way.
If you need advice relating to a business sale or exit strategy, get in touch with our financial planning team.
Sources:
(Balance: Wealth website)
https://www.gov.uk/business-asset-disposal-relief
https://www.gov.uk/guidance/business-rates-relief-202526-retail-hospitality-and-leisure-scheme
https://www.streets.uk/about-us/news/future-increases-in-cgt-on-sale-of-a-business/
https://www.bpcollins.co.uk/iht2026/
