The allowance that used to cover a small business sale is now £3,000

Founders planning an exit tend to research the rates. They are 18% and 24%, having risen for disposals on or after 30 October 2024, and they are the figures every guide leads with.

The number that decides whether a sale is straightforward or expensive is not a rate. It is the annual exempt amount, the slice of gain taken tax free each year, and it has fallen from £12,300 to £6,000 to £3,000 inside three tax years. More than three-quarters of it has gone.

Capital Gains Tax receipts reached a record £22.2 billion in 2025/26, against a previous peak of £16.9 billion in 2022/23 and an Office for Budget Responsibility forecast of £20.3 billion. Some of that is temporary. The OBR attributes part of the spike to owners bringing disposals forward ahead of anticipated rate rises at the October 2024 Budget, and a rush is not a trend. The allowance is not temporary.

What that does to an exit

Selling a company is usually a once-in-a-working-life transaction. The founder has spent years thinking about growth, runway and hiring, and has almost never had cause to think about the annual exempt amount.

At £12,300 the allowance did real work on a modest disposal. At £3,000 it is close to a rounding error against any sale price worth the negotiation. What used to shelter part of the gain now barely registers, and the practical consequence is that the tax calculation, and the records behind it, matter far more than they did.

The same is true of the smaller disposals a company makes on the way. A secondary sale, a shareholder selling out to the others, an early employee cashing in options: each is a chargeable event, and each meets the same £3,000.

Where the money is actually lost

The gain is proceeds less cost. Cost is not just the purchase price. It includes acquisition costs and, for an asset held over years, the capital spending that went into it.

That is the part nobody can reconstruct after the fact. For shares, it means knowing what was paid for each tranche, when, and under what arrangement. A founder who subscribed at incorporation, bought a leaver’s shares in year three, and was issued more on a small round in year five has three separate acquisition costs, and has them only if the paperwork exists.

This is where a company either has digital record keeping going back through the whole ownership period or it does not, and the answer is fixed long before anybody starts thinking about selling. A cap table with dates, prices and documents behind it is worth 24 pence in the pound on every pound inside it at the higher rate. A missing folder is worth nothing at all.

Nobody notices this while trading, because the annual accounts do not depend on it. The year of the sale is when it turns into cash.

Two things that are still free to get right

Both spouses’ allowances. The exempt amount belongs to the person. An asset held jointly by spouses or civil partners produces a gain split between two people, each with their own £3,000. Transfers between spouses and civil partners are treated as producing neither a gain nor a loss, which is what makes the planning possible at all. It has to be done properly and before the sale, not described that way afterwards.

For a company whose founder shares sit entirely in one name out of habit rather than decision, that is worth examining while there is time.

The tax year the disposal falls in. Two disposals in two tax years attract two allowances. Two in the same tax year attract one. The tax year ends on 5 April, so a completion moving from early April back to late March merges two allowances into one.

This only works where the timing is genuinely negotiable, which for a company sale it sometimes is. Where it exists, it costs nothing.

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Why this pattern keeps recurring

An allowance cut is a tax rise that is never announced as one. No rate moves, so no headline appears, and the effect is more thorough than a rate change because it decides who pays rather than how much existing payers pay.

Founders have now seen the same mechanism several times: thresholds frozen or cut while rates hold, quietly drawing in people who were previously outside the tax altogether. The receipts confirm it works. £22.2 billion against a previous peak of £16.9 billion is not marginal.

The people newly caught are, on the evidence of who is being drawn in, rarely the sophisticated sellers. It is the employee cashing in a few years of shares, and the founder selling a modest business after a decade. Those are one-off transactions by people with no adviser tracking thresholds on their behalf.

What to do if a sale is anywhere on the horizon

Find out what your shares cost you, in evidence rather than memory, and fix any gaps now while the paperwork still exists somewhere. That single exercise usually moves more money than any structuring decision taken in the final month.

Then check whose name things are in, and whether the disposal has to happen in one tax year or could sensibly straddle two.

None of that is clever planning. It is the ordinary work that used to be partly covered by a £12,300 allowance and now is not covered by anything.