Generating key takeaways...
With the upcoming increase in CGT rates scheduled for April 2026, UK business owners are urged to plan early to maximise tax efficiencies through Members’ Voluntary Liquidations before rates rise from 14% to 18%. Experts highlight the significance of timely action amid shifting regulations and safeguards against tax avoidance.
Significant changes to Capital Gains Tax (CGT) are poised to take effect in the UK over the next couple of years, prompting business owners in Northern Ireland and beyond to reconsider their exit strategies. From April 2026, the rate for Business Asset Disposal Relief (BADR), previously known as entrepreneurs’ relief, will rise from the current 14% to 18%. This increase has sparked urgency for those considering winding up their companies through a members’ voluntary liquidation (MVL) to capitalise on the more favourable tax rate before it escalates.
Currently, BADR enables qualifying business owners to benefit from a reduced CGT rate when disposing of shares or business assets. The rate was historically 10%, increased to 14% in April 2025, and is set to climb again to 18% in April 2026. The lifetime limit on qualifying gains remains at £1 million, which means individuals can claim the relief multiple times, provided total gains do not exceed this threshold. However, despite the unchanged cap, the rising rates effectively erode the relief’s value, making timing crucial.
The financial implications of the planned increase are stark. For example, on a gain of £1 million, the move from a 14% to an 18% CGT rate represents an additional tax burden of £40,000. For business owners with considerable retained profits, this can mean a significant difference in net proceeds. An illustrative comparison shows that extracting £250,000 from a company via an MVL at the current 14% BADR rate incurs £35,000 tax, leaving £215,000 after tax. Once the rate rises to 18%, tax rises to £45,000, reducing net proceeds to £205,000. By contrast, taking the same amount as dividends could trigger a tax bill of up to £98,375, leaving just £151,625. This highlights the substantial tax efficiencies MVLs offer, especially when directors meet BADR eligibility criteria, including a minimum of 5% shareholding, two years’ ownership, and active involvement in the business.
The MVL process, however, is methodical and cannot be hurried. It demands preparation of final accounts, settling outstanding liabilities, and procuring a Declaration of Solvency, with insolvency practitioners commonly advising a timeline of at least two to three months before the intended distribution to ensure compliance and procedural accuracy. With the BADR rate increase scheduled for April 2026, business owners eyeing the older 14% rate should commence planning now.
Additional safeguards are also being introduced to prevent tax avoidance. Anti-forestalling rules will apply to disposals spanning the rate change date or those involving unconditional contracts, closing loopholes that allow taxpayers to lock in the current lower rates artificially.
Though some may view a £40,000 difference on a £1 million disposal as modest, the impact can be profound in the broader contexts of retirement, business succession, or transitioning ventures. For owners of multiple companies or larger reserves, these savings can multiply, making prompt, structured, and compliant exits via MVLs even more attractive.
Industry advisors underscore that these tax changes signal a narrowing window for tax-efficient business disposals. Alongside ensuring legal and regulatory compliance, timely MVLs offer clarity and peace of mind, helping directors avoid the pitfalls of informal company strike-offs and ensuring smooth closure with HMRC and Companies House.
The UK government’s adjustments to CGT rates, announced in October 2024, underline the broader objective to align CGT more closely with income tax, thereby supporting public finances. The basic CGT rate for most assets, excluding residential property and carried interest, has increased from 10% to 18%, and the higher rate from 20% to 24%. However, the rates for residential property remain at 18% and 24%. The phased increase to BADR rates further reflects this alignment.
Business owners and investors should seek tailored advice given the complexity of the tax rules and the significant financial stakes involved. With the MVL route offering a clean statutory closure and substantial tax advantages, those eligible are prudent to act promptly to lock in the current lower rates before the inevitable April 2026 hike.
📌 Reference Map:
- [1] (Irish News) – Paragraph 1, 2, 3, 4, 5, 6, 7, 8, 9, 10
- [2] (Gov.uk announcement) – Paragraph 2, 9
- [3] (TLT LLP) – Paragraph 2, 5
- [4] (Rouse Partners) – Paragraph 2, 9
- [5] (Paul Beare) – Paragraph 2, 7
- [6] (DSK LLP) – Paragraph 5, 7
- [7] (Gov.uk announcement) – Paragraph 2, 9
Source: Noah Wire Services
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
8
Notes:
The narrative discusses upcoming changes to Capital Gains Tax (CGT) rates, specifically the increase in Business Asset Disposal Relief (BADR) from 14% to 18% effective April 2026. This information aligns with official announcements from HMRC and other reputable sources. The earliest known publication date of similar content is October 2024, when the UK government announced the planned increase in BADR rates. The narrative provides updated figures and examples, indicating a higher freshness score. However, the core information has been available for over a year, which slightly reduces the freshness score. Additionally, the narrative includes a reference map with links to various sources, enhancing its credibility. The presence of a press release from the UK government in the reference map suggests that the narrative is based on official information, which typically warrants a high freshness score. No significant discrepancies in figures, dates, or quotes were identified. The narrative does not appear to be republished across low-quality sites or clickbait networks. Overall, the freshness score is 8.
Quotes check
Score:
9
Notes:
The narrative does not contain any direct quotes. The absence of quotes suggests that the content is potentially original or exclusive. This absence contributes positively to the originality score. The lack of direct quotes also indicates that the content is not recycled from other sources. Overall, the quotes score is 9.
Source reliability
Score:
9
Notes:
The narrative originates from The Irish News, a reputable news outlet. The inclusion of a reference map with links to various sources, including official UK government publications, enhances the reliability of the information presented. The presence of a press release from the UK government in the reference map suggests that the narrative is based on official information, which typically warrants a high reliability score. Overall, the source reliability score is 9.
Plausability check
Score:
9
Notes:
The narrative’s claims about the increase in BADR rates from 14% to 18% effective April 2026 are consistent with official announcements from HMRC and other reputable sources. The examples provided, such as the tax implications of a £1 million gain, are plausible and align with the announced changes. The narrative does not contain any surprising or impactful claims that are not covered elsewhere. The language and tone are consistent with typical financial reporting, and there are no inconsistencies in spelling or phrasing. The structure is focused and relevant to the topic, without excessive or off-topic detail. Overall, the plausibility score is 9.
Overall assessment
Verdict (FAIL, OPEN, PASS): PASS
Confidence (LOW, MEDIUM, HIGH): HIGH
Summary:
The narrative provides accurate and up-to-date information on the upcoming increase in BADR rates from 14% to 18% effective April 2026, consistent with official UK government announcements. The content is original, sourced from a reputable outlet, and free from significant discrepancies or disinformation. The absence of direct quotes and the inclusion of a reference map with links to various sources, including official publications, enhance the credibility of the information presented. Overall, the narrative passes the fact-check with high confidence.
