Corporate law specialist warns sellers over BADR timing risks

A leading corporate law specialist has warned business owners to move quickly if they intend to sell before next April’s rise in the Business Asset Disposal Relief (BADR) rate, saying delays of only a few weeks could lead to tens of thousands in extra tax exposure.

From 6 April 2026, the BADR rate on qualifying disposals will increase from 14% to 18%, following legislation introduced in the 2024 Autumn Budget. The change affects entrepreneurs and owner-managers who qualify for the reduced Capital Gains Tax rate when selling their company or shares. Although the lifetime limit of £1 million remains, the increase means the tax on that amount will rise from £140,000 to £180,000 once the new rate applies.

James Howell, Managing Director at corporate law firm Rubric Law, said too many sellers underestimate how long business sales take and where the real timing risks lie. “One of the biggest misconceptions sellers have is that a business sale is simply a negotiation on price,” Howell said. “In reality, timelines are determined far more by the mechanics of the deal than by the number on the headline.”

He warned that many transactions stall for reasons unrelated to valuation, with property documentation often the main culprit. “Issues such as outdated leases, missing landlord consents, unclear rights of occupation, or historic defects in documentation can add significant time to the process. These matters are usually capable of being resolved, but rarely quickly, and almost never without cost or effort,” he said.

Financial due diligence is another common choke point. “If a business has incomplete, inconsistent, or poorly organised accounts, buyers will naturally raise more questions,” Howell added. “This prolongs the transaction and often results in tighter warranties, indemnities, or even price renegotiations. First-time sellers are frequently surprised by how much time is lost assembling information that should already exist in a sale-ready format.”

According to international advisory firm Azets, typical private company sales take between six and twelve months to complete, with due diligence, financing, and compliance checks among the main causes of delay. HMRC guidance confirms that, for BADR purposes, the completion date — not the contract date — determines which rate applies, unless strict anti-forestalling conditions are met.

Howell said sellers hoping to complete before April 2026 should begin preparing several months before going to market. “As a rule of thumb, owners should allow at least three to six months to get their affairs in order,” he said. “Being ready to move decisively when a serious buyer arrives can materially influence both the pace of a transaction and the tax ultimately paid.”

With the new year approaching, Howell urged business owners not to underestimate the time needed for legal and financial preparation. “Recurring blockers include disorganised accounts, contract irregularities, and property issues,” he said. “Even if each takes only a few weeks to resolve, together they can make the difference between completing under the current rate or the higher one due in April.”