Tax Changes Prompt More UK Entrepreneurs To Sell Their Business

More UK entrepreneurs are considering selling their business following tax changes, according to a recent survey of 4,000 UK adults commissioned by Brown Shipley, the UK wealth manager and subsidiary of Quintet Private Bank.

Almost two fifths of UK entrepreneurs (38%) say they plan to explore selling their business earlier than planned due to tax changes announced in the October 2024 Budget, according to the latest research. Meanwhile, just over two in five (44%) UK entrepreneurs say that the increase in National Insurance will impact their plans for business growth.

These tax changes combined with challenging market conditions are likely informing sentiment among business owners. Over a third (36%) of respondents say they intend to sell their business in its entirety to crystalise value and manage wealth, compared to 21% in January 2024.

Financial risk remains top of mind, and an increased number of business owners intend to seek external investment in their companies over the next 12-36 months to diversify their financial risk, with those figures increasing significantly since the October Budget (December 2024: 40% vs January 2024: 25%). Slightly fewer (37%) intend to seek external investment over the same period as part of their company’s strategic growth plans.

Despite UK inheritance tax changes for businesses, a third of entrepreneurs say they plan to reduce their equity in the business but keep it within the family as part of their generational wealth planning. Younger entrepreneurs are more interested in this than are older entrepreneurs (18-34: 49% vs 55+: 10%). Meanwhile, over one third of entrepreneurs (36%) have plans to reduce their ownership through internal succession to employees; similarly, this decreases with age (18-34: 53% vs 55+: 9%).

Entrepreneurs are focused on managing wealth, and confidence in financial planning increased in the last year. 54% of survey respondents reported confidence in the planning they have undertaken, with confidence higher among young entrepreneurs at 68%. That is up from 47% recorded in January 2024.

Simon Smith, Head of Private Banking, South at Brown Shipley said:

“The survey findings are reflective of conversations we are having with entrepreneurs. Confidence in the UK market is currently more challenging than it has been, and entrepreneurs are carefully assessing their options. In addition to business sentiment, entrepreneurs are considering what inheritance tax changes will mean for the legacy of their business. This reflects the fact that preserving wealth for future generations and succession planning are often key considerations for entrepreneurs when they are looking to sell or pass on their businesses.”