For many SME business owners, an exit event, whether an IPO, trade sale, management buy-out, or secondary buy-out, represents a defining milestone. After years of investment, growth and sacrifice, it’s the moment when decades of effort are realised in value. But the commercial execution of a sale is only half the story: how you structure your tax affairs in the years before exit can dramatically affect the outcome for you and your family.

That timing has never been more important. A set of major UK tax reforms scheduled to take effect from April 2026 will reduce or eliminate planning opportunities that have historically made exits more tax-efficient. Business owners who delay their planning risk arriving at the negotiating table with fewer reliefs, greater exposure and limited structural flexibility.

Why Planning Should Start Well Before Exit

Effective tax planning is not something that can be crammed into the final weeks before a sale. In our experience, entrepreneurs benefit most when planning begins at least two years before exit, ideally sooner. Early planning offers clarity on tax exposure, ensures a full understanding of current tax reliefs and exemptions, and allows time to optimise structures for the best outcome.

Starting early gives you the flexibility to consider a range of strategies, such as repositioning shareholdings, constructing tax-efficient investment vehicles, or considering charitable and philanthropic giving in a way that maximises reliefs. It also ensures there’s time to align internal stakeholders, particularly key employees with share options or long-term incentives, so that the broader leadership team remains motivated and focused throughout the process.

The April 2026 “Cliff Edge” for Business Property Relief

One of the most significant shifts affecting exit planning relates to Business Property Relief (BPR), a key tool for business owners looking to pass wealth on free from inheritance tax. Under current law, qualifying business assets can be transferred into structures such as trusts without immediate inheritance tax charges. This has been a powerful planning advantage for families looking to protect intergenerational wealth.

However, from 5 April 2026, that opportunity changes. The ability to transfer unlimited business value into trust free of IHT will disappear, and BPR will be restricted with a cap on the amount that can be transferred at zero tax cost. The consequence is that transfers executed after that date may trigger substantial tax charges that would otherwise have been avoidable under the existing rules.

For business owners contemplating a sale or liquidity event over the next few years, this represents a once-in-a-generation planning horizon. The window to take full advantage of the current reliefs, by relocating shareholdings into trusts or other vehicles, will close abruptly, potentially shifting millions of pounds in tax liabilities.

Residence, Relocation and Post-Exit Tax Exposure

Where you live and for how long can be just as consequential as how your business is structured. Under the UK’s evolving tax rules, residence now determines tax exposure, rather than domicile. This change, enacted from 6 April 2025, means that UK tax obligations on worldwide gains and income arise based on residency status alone, eliminating many of the planning advantages formerly enjoyed by non-domiciled individuals.

Relocating abroad before an exit can, in principle, reduce UK tax liabilities on future gains, but only if done with careful timing and professional planning. Retaining ongoing links to the UK, such as directorships, frequent travel or contractual roles, can inadvertently pull you back into UK tax scope. A thorough evaluation of residence, domicile history and post-exit intentions should therefore form part of any serious exit strategy.

Corporate Structuring Options to Improve Tax Efficiency

Beyond domicile and trust solutions, several corporate structures remain relevant for SME owners planning an exit. One option involves introducing a holding company that can facilitate access to reliefs such as the Substantial Shareholding Exemption (SSE), which may allow certain corporate sales to proceed with minimal tax at a company level. Carefully constructed holding structures can also help protect assets from future inheritance tax exposure, provide governance benefits, and make entities more attractive to potential acquirers.

Separate vehicles such as Family Investment Companies (FICs) and Personal Investment Companies (PICs) continue to be valuable for managing wealth post-exit. These entities offer controlled, flexible environments for reinvesting or preserving funds in a tax-efficient manner, advantages that become increasingly valuable when other

Motivating Key Team Members Ahead of Transaction

Exits are not executed in a vacuum. A motivated and aligned management team can be a deciding factor in achieving a successful transaction, particularly where buyers are assessing continuity and expertise post-sale. Reviewing and refining share-based incentive schemes, such as Enterprise Management Incentives (EMIs) or other options, well in advance of exit can ensure that key personnel are rewarded fairly, tax-efficiently and in a way that aligns with the company’s objectives.

Another vehicle sometimes considered is the Employee Ownership Trust (EOT). Where appropriate, an EOT can allow shareholders to “cash out” without triggering a capital gains tax charge, provided the arrangement meets certain conditions. While not suitable for every business, particularly family-centric succession plans, it remains an important option that merits early consideration with professional guidance.

Why Delay Is Costly

Businesses that postpone exit planning until the final months before a sale risk boxed-in choices and missed opportunities. The April 2026 changes are not speculative, they are scheduled and legislated, with meaningful impacts on relief availability and tax exposure. Where large volumes of wealth may be affected, delaying action could translate into millions of pounds of additional tax, irreversible structural consequences and reduced flexibility in negotiations.

Acting early enables occupants in both operational and advisory roles, accountants, tax specialists, lawyers and corporate financiers, to align their strategies and ensure that every aspect of the planned exit is optimised, both commercially and from a tax perspective.

Conclusion – Start Planning Now

Every business owner’s exit journey is unique, but one truth remains universal: the earlier you plan, the more choice you preserve. The April 2026 changes to key reliefs like Business Property Relief, and the overarching shift in residence-based taxation, make 2025 and early 2026 a critical period for planning.

At UHY Williamson Croft, our team specialises in helping SME owners and entrepreneurs navigate this increasingly complex tax landscape.

We work collaboratively with you and your team to shape strategies that protect value, reduce risk and maximise flexibility ahead of liquidity events.

If you are contemplating an IPO, trade sale or other form of exit, now is the time to act – contact us before the window for certain tax planning opportunities closes.