1 July 2027 CGT Changes: What I Think Business Owners Should Be Thinking About
I’ve been thinking a lot about the 1 July 2027 CGT changes, and some parts of what’s being proposed don’t seem particularly fair. There is still detail to come, though, so I’d be cautious about letting the changes determine when to sell a business.
Most of the accountants I’ve spoken with are taking a similar view. They’re getting questions about what the changes could mean and whether people will end up paying more tax. Until the detail is clearer, it’s difficult to know how individual owners will be affected. I can understand why someone already thinking about selling, retiring or passing a business on might be looking at their timing a little differently.
For me, the 1 July 2027 CGT changes are one part of a much broader decision about the future of the business.
If the changes are causing someone to reconsider when they exit, the practical question I come back to is what the business is actually worth. If you’re thinking about bringing a sale forward, I’d want to know whether the value you’ve been planning around is realistic.
CGT Changes Bringing Exit Plans Into Focus
For someone who already had an exit somewhere on the horizon, I can see how the CGT discussion could make that decision feel more immediate. A sale that was several years away might suddenly be considered sooner, which brings the expected sale value into the conversation much earlier as well.
Selling the business requires a certain amount of lead time, as generally, you would need to appoint an adviser to prepare an information memorandum, marketing materials, and then proceed to market and promote the opportunity.
Once interested parties are identified, due diligence material would need to be provided. Then negotiations which generally take place to complete the sale. This process can take several months.
Additionally, to properly prepare a business for a sale, you’d ideally require a runway of at least six months to optimise drivers of value and prepare the business for sale. Accordingly, business owners are already likely to be running out of time to complete a sale prior to the tax changes.
The Value Sitting Behind an Exit Plan
I’ve thought about that example in the context of the CGT changes because owners can carry a number in their head for years. That number may be connected to retirement, succession or simply what they expect to take away from the business when they eventually step away.
If the tax changes cause that exit to come forward, the number becomes relevant sooner than the owner may have expected. That’s where I’d want to know whether the assumptions behind it still hold up.
If the 1 July 2027 CGT change affects when you might exit, I think it’s worth understanding the value you’re relying on before you change the plan.
What I Think Is Worth Keeping in Mind
When I was recently asked what I thought about all of this, I kept coming back to the importance of understanding your own position.
For me, that means waiting until there is enough detail to properly consider what the tax changes could mean for your circumstances, while also having a realistic view of the business behind an exit or succession plan. I’d want to know what I was planning around before allowing the tax changes to influence a decision I may have been thinking about for years.
There is still uncertainty, and I’m comfortable with that. We don’t have to pretend every answer is available today. I think there is more value in being clear about what we know, what we’re still waiting to understand and what that means for the decision in front of you.
If the changes have prompted you to think a little more about your own plans for the business, I’m always happy to have a conversation about the valuation side of it.