What do business owners need to consider in 2026?

For many owner-managed businesses, “the future” rarely reaches the top of the agenda. With the daily pressures of clients, staff, cash flow, and operations, long-term planning can feel like a luxury. Yet one of the most important decisions an owner will ever make is how, and when, to step back while protecting the value they’ve created.

With significant tax changes coming into force from 2025 and 2026, including increases to Capital Gains Tax (CGT) and reforms to Employee Ownership Trust (EOT) relief, this is the right moment for business owners to reassess their succession strategy.

Below are four core exit routes for owner-managed businesses, and how the changing landscape affects each.

Management Buyouts (MBOs)

Still viable — but the stakes have changed

From April 2026, the CGT rate on disposals qualifying for Business Asset Disposal Relief (BADR) rises to 18%, with a £1 million lifetime cap. Once that allowance is used — or where conditions are not met — the full rate applies.

Because MBOs typically involve payment over time, the seller relies on the company’s future profitability and the capability of the management team. With higher tax costs, deferred consideration becomes more exposed to performance risk, placing greater emphasis on robust forecasting, leadership strength and cashflow resilience.

MBOs work best where a strong internal team is already driving growth and profits are predictable enough to support structured repayments. They remain an effective route, but require more careful risk assessment than in previous years.

Employee Ownership Trusts (EOTs)

Culturally powerful and still tax-efficient

EOTs allow owners to sell to employees through a trust structure, preserving independence and supporting long-term continuity.

From 26 November 2025, only 50% of the gain on disposal will be relieved from CGT, with the remaining 50% taxable at the seller’s rate. For many owners, this results in an effective tax rate of around 12%.

While no longer entirely tax-free, EOTs remain comparatively efficient. Their appeal, however, goes beyond tax. For owners seeking to protect culture, reward loyalty and safeguard independence, they continue to offer a compelling balance between financial return and legacy.

Trade Sales

Often delivering maximum value

A sale to an external buyer — whether a competitor, consolidator or private equity investor — frequently achieves the highest headline valuation, particularly in sectors where scale and synergies are attractive.

As with other routes, CGT on qualifying disposals rises to 18% from April 2026, subject to the BADR lifetime cap.

Preparation is critical. Strengthening financial reporting, systemising operations and clarifying market positioning can materially enhance value. Trade sales typically suit owners seeking a clean break and maximum commercial return, though they may involve the greatest cultural change.

Solvent Liquidation (MVL)

A practical solution in the right circumstances

For owners who no longer wish to trade and want to extract retained value, a Members’ Voluntary Liquidation (MVL) provides a straightforward and tax-efficient mechanism.

MVLs are appropriate where the company holds significant retained cash or assets, trading has ceased, and no succession is required. They offer a structured method of winding down and distributing capital, particularly where transferable goodwill is limited.

Choosing the Right Route

There is no universal “best” exit. The right choice depends on financial objectives, appetite for risk, leadership capability and personal priorities.

• An EOT may offer strong cultural continuity.
• A trade sale may maximise financial return.
• An MBO can preserve independence where the management team is robust.
• An MVL may suit those seeking an orderly wind-down.

What is clear is that tax changes have increased the importance of early and deliberate planning.

Planning with Purpose

Succession planning is no longer simply about finding an exit — it is a strategic process that shapes the future of the business, its people and the owner’s legacy. With significant tax changes taking effect from 2025 onwards, there has never been a more important time for business owners to review their options.

The strongest outcomes arise when owners begin planning three to five years ahead, build a capable leadership team, and explore every route with clarity — financial, cultural and personal.

For many business owners, the sale of their business is the largest financial transaction they will undertake.

Given the evolving tax landscape and the complexities of succession planning, starting early ensures that your legacy is preserved, your financial goals are met, and your business continues to thrive.

At TC Group, our dedicated Corporate Finance team thrives on working closely with business owners to expertly prepare and execute successful exit strategies.