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As the dust settles on the UK government’s Autumn 2024 Budget, small business owners are taking stock of the implications. For many, the changes announced have created a unique set of circumstances that make this an opportune moment to consider selling their business. Here’s why.

The Chancellor’s announcements included several measures that directly impact small and medium-sized enterprises (SMEs). While some changes are designed to stimulate growth, others have created a financial landscape that may encourage business owners to explore exit strategies.

1. Changes to Capital Gains Tax (CGT)

One of the most significant announcements was the immediate increase in Capital Gains Tax (CGT) rates for base (10% to 14%) and higher-rate (20% to 24%) taxpayers. Although an increase has been implemented immediately, this is well below some of the increases being quoted, with some suggestions of an increase in line with income tax.

2. Corporation Tax Adjustments

The Budget confirmed a further rise in Corporation Tax for businesses with profits exceeding £250,000. While smaller businesses remain subject to lower rates, the increased burden on larger enterprises could lead to a slowdown in acquisition activity in the medium term. For SMEs, this means that the current market is ripe with buyers looking to invest before the full impact of these changes takes effect.

3. Economic Uncertainty and Interest Rates

The Budget acknowledged the ongoing challenges of inflation and higher interest rates, which have made borrowing more expensive for businesses. While the Bank of England has signalled that rates may stabilise in 2025, the current environment has created a buyer’s market. Private equity firms and strategic acquirers are actively seeking well-priced opportunities, making it an ideal time for business owners to achieve a favourable valuation.

The new Chancellor of the Exchequer, Rachel Reeves, has been clear in comments that the growth of the economy is the number one priority of the new Labour Government and has been keen to emphasise the UK will still have the lowest Capital Gains Tax rate of any European G7 economy.

Further changes which may impact Business Owners looking to the future include the change from April 2025 to the Business Asset Disposal Relief when it will increase from 10% to 14%, increasing further to 18% in 2026-27, and increase in employers NI from 13.8% to 15% in April 2025. To mitigate these financial pressures, the government has doubled the Employment Allowance to £10,500, offering some relief to small businesses by reducing their NICs liability.

For many small businesses, these cost increases will squeeze margins, making it more difficult to sustain independent operations. As a result, smaller firms may become more attractive acquisition targets for larger players or investors seeking to consolidate market share. However, for well-capitalized businesses, these relief measures create opportunities to acquire distressed competitors at more favourable valuations.