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This case study is based on a real case, but names, characters and certain details have been changed to protect confidentiality. The figures are illustrative and based on 2026/27 rates. Your own position will depend on your circumstances, so please take advice before acting.
The situation
Mark founded a precision engineering company in King’s Lynn in 2011. He built it from a two-person workshop to a firm employing 22 people.
In early 2026, a larger group approached him with an offer. After negotiation, he agreed to sell his shares for £900,000. Completion took place in June 2026.
Mark originally subscribed £100,000 for his shares. Legal and broker fees on the sale came to £15,000.
He came to us with one question. How much Capital Gains Tax would he pay, and could it be reduced?
Working out the gain
Capital Gains Tax is charged on the gain, not the sale price. The gain is the proceeds less the original cost and the costs of selling.
| £ | |
|---|---|
| Sale proceeds | 900,000 |
| Less: original cost of shares | (100,000) |
| Less: legal and broker fees | (15,000) |
| Chargeable gain | 785,000 |
| Less: annual exempt amount 2026/27 | (3,000) |
| Taxable gain | 782,000 |
The tax without relief
For 2026/27, individuals pay CGT at 18% on gains within their unused basic rate band and 24% above it. Mark is a higher rate taxpayer, so the full gain would fall at 24%.
Tax at 24%: £187,680
The tax with Business Asset Disposal Relief
Business Asset Disposal Relief (BADR) reduces the CGT rate on qualifying business disposals. It covers gains up to a lifetime limit of £1 million.
To qualify, Mark needed to meet three conditions for at least two years before the sale:
- The company was a trading company.
- He held at least 5% of the shares and voting rights.
- He was an officer or employee of the company.
Mark had been the majority shareholder and a director since 2011. He qualified comfortably.
For gains made on or after 6 April 2026, the BADR rate is 18%. Mark’s gain was well within the £1 million lifetime limit.
Tax at 18%: £140,760
Saving compared with the standard rate: £46,920
Why the timing mattered
The BADR rate has been rising. It was 10% until April 2025, 14% for 2025/26, and 18% from April 2026.
Had Mark completed the sale before 6 April 2026, his tax would have been £109,480. Completing in June 2026 cost him an extra £31,280.
The buyer’s timetable was not in Mark’s control. But this shows why exit planning should start early, ideally two years or more before a sale.
What Mark had to do next
CGT on a share sale is reported through Self Assessment. Mark’s 2026/27 tax return is due by 31 January 2028, and the tax is payable on the same date.
We recommended he set the money aside now. Eighteen months is a long time for a large sum to sit unnoticed.
Three lessons from Mark’s case
1. Check the qualifying conditions early. The two-year rule catches people out. A spouse who becomes a shareholder six months before a sale will not qualify for BADR on their shares.
2. Keep records of costs. Mark’s £15,000 in fees reduced his taxable gain. Without invoices, HMRC may not accept the deduction.
3. Reliefs change. BADR has become less generous three years running. The Autumn Budget on 28 October 2026 has prompted further speculation about CGT, though nothing has been confirmed.
Thinking about selling?
If a sale, retirement or succession is on the horizon, it is worth reviewing your position now. A conversation two years before the event gives far more options than one two months before.
Our team at Jermyn & Co can review whether you qualify for BADR, estimate the likely tax, and help you plan the timing. Get in touch to arrange a chat.
This article is for general information only and does not constitute tax advice. Rates and allowances are correct for the 2026/27 tax year at the time of writing.