Early business exits driven by tax fears

A new survey on motivations behind business sales has revealed that over half of entrepreneur respondents (56%) are considering an early business exit over concerns about tax rises. Of those who have already sold, nearly two-thirds (65%) said fear of tax hikes drove them to exit their business early.

The research, conducted by London-based private and commercial bank Arbuthnot Latham & Co, underscores the anxiety many founders feel in the face of changing tax policies - particularly in the wake of recent and upcoming changes to Business Asset Disposal Relief (BADR) and Investors' Relief.

The report provides valuable insight into how fiscal uncertainty influences exit timing. However, it’s important to add context around the findings, especially for owners currently weighing their next steps.



Current tax changes
The survey results were released on 14 April 2025, but the research itself would likely have been conducted before the first increase in BADR and Investor’s Relief rates (from 10% to 14% effective 6 April 2025). Now that we are in the post-14% landscape, the next tax jump - to 18% from April 2026 - is still nearly a year away.
In short, we are in a “plateau period.” While entrepreneurs should certainly be mindful of future tax increases, there is breathing space to plan properly, rather than rushing into a sale.

Sample size and implications
It’s also worth noting that Arbuthnot’s study surveyed 100 businesses (all with a minimum annual turnover of £1m, 29% exceeding £5m) - a helpful snapshot, but not a comprehensive view of the wider entrepreneurial community. Different sectors, business sizes, and geographies may feel these pressures differently.

Why a planned exit beats a rushed one
While the fear of losing 4% more to tax next year is real, the bigger danger is leaving money on the table through an unprepared or poorly negotiated sale.

The reality is that a thoughtfully planned exit, ideally over a 2 to 5-year horizon, will have a much greater influence on final sale price and net proceeds than the tax differential alone. Strategic planning can increase company value by 20-50% or more through steps like:

• Building recurring revenue streams


• Strengthening management teams


• Diversifying customer bases


• Protecting intellectual property


• Optimising financial reporting


• Reducing reliance on the owner

It is not difficult for an M&A adviser to demonstrate how even a 4% reduction in costs, or a 4% improvement in revenue, can enhance the value of a company - totally dwarfing the impact of a 4% increase in tax.

Action steps for entrepreneurs
If you are concerned about tax and thinking about your exit, consider these immediate actions:
Start formal exit planning now. Engage experienced advisers - M&A specialists, tax planners, wealth managers - to map your optimal path.

- Benchmark your business readiness. Assess where value gaps exist and set up a 90-day sprint plan to start closing them.

- Align business and personal goals. Ensure that your personal financial planning (retirement, estate, philanthropic goals) matches your business strategy. Consult with a wealth planner well in advance for advice on how to plan, manage, and structure the personal wealth from an exit.

- Monitor tax policy developments. Stay informed, but avoid reactive decision-making based purely on tax fears.

Arbuthnot Latham’s report highlights the powerful psychological effect of tax policy on entrepreneurs. But while awareness is essential, it’s even more important to act deliberately rather than emotionally.

Done properly, exit planning creates options - whether that means selling before the 18% rate hits next April, or continuing to build value and exiting on even stronger terms later.

Get your instant personal and business exit readiness score at Celestus.com, our Exit Planning Consultancy division.

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