The mooted changes to capital gains tax could drive adviser firm sales, says Anthony Carty, managing director of Clifton Wealth Partnership.
As speculation around possible policy and tax changes gather momentum in the run up to the Autumn Budget, CGT has been cited as a potential target for the Chancellor.
Some quarters have argued that CGT rates should be aligned with income tax rates – an idea that has gained traction because of the government’s pledge not to increase the main rates of income tax, national insurance and VAT.
However, Carty said that for advisers thinking about selling their firm, any rate rise would have consequences as many firm owners have most of their wealth tied up in their business.
Carty said: “We’ve already seen tax uncertainty play a part in owners’ decisions to sell. The CGT rate on sales qualifying for Business Asset Disposal Relief has almost doubled since the 2024 Budget, from 10% to 18%, and some owners have chosen to sell sooner rather than risk a bigger bill later. If CGT rises again in October, it would be reasonable to expect more firms to do the same.
“When thinking about selling a business, tax is a legitimate consideration. Nevertheless, it’s one factor among many, and I’d urge anyone weighing up a sale not to let the tax tail wag the dog.”
Carty said the timing has to be right for the owner, which usually means being ready to step back and the business should also be in good shape, with strong client retention, healthy growth and well-organised data.
Carty added: “A Budget announcement in isolation is rarely a good enough reason to sell as decisions made in reaction to a headline tend to be emotional ones. My advice would be to take a breath once the Budget has landed. Speak to your accountant, understand your position and then talk to buyers properly. A good deal will still stand up in six months’ time.”
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