A leading Manchester M&A law firm has said it is facing a sharp rise in enquiries from British tech founders attempting to sell their businesses before new higher Capital Gains Tax (CGT) rates come into force in April, stoking fears that a rapid sell-off may result in a loss of talent and growth from the UK economy.
Blackmont Legal has reported a significant increase in instructions from tech industry leaders seeking to complete business sales ahead of 5 April, the end of the UK tax year, to avoid higher CGT rates introduced in the October 2024 Autumn Budget.
Chancellor Rachel Reeves raised the headline rate from 20% to 24% for higher rate taxpayers and set out a two-stage increase to Business Asset Disposal Relief, the key relief used by founders selling their companies, with the rate rising from 10% to 14% this April, and again to 18% in April 2026.
Zohaib Hashim, founder and CEO of Blackmont Legal, believes the wider consequences for Britain’s startup ecosystem are being overlooked.
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Hashim said: “These sellers are supposed to be the next wave of investors, mentors and co-founders. When experienced founders exit under pressure, the capital and knowledge don’t automatically stay in the UK economy. It can easily go into property, move offshore or sit on the sidelines.”
The UK’s startup sector has long relied on a recycling effect. Founders who exit successfully tend to reinvest as angel investors and back the next generation of startups. A wave of rushed, tax-driven exits risks disrupting that cycle, Hashim claimed.
“The financial difference on a £5 million exit can run into hundreds of thousands of pounds. We are hearing from founders who have spent years building their businesses and are now making rushed decisions because of a policy change,” he said.
“The danger is that they accept lower valuations, close on unfavourable terms, or walk away from the right buyer because they are reacting to a deadline rather than making a considered decision.”
“Clients are now rushing to complete on transactions before the deadline in April.”
The pressure is felt acutely in the tech sector, where founders typically hold large equity stakes. Unlike salary income, gains on share sales are taxed at CGT rates, making the April deadline particularly consequential for anyone planning an exit.
An uncomfortable question is what happens to the businesses being sold. Rushed deals mean founders may accept buyers who are not the right long-term stewards. Companies built over decades can change hands in weeks, shaped less by strategy than by a tax calendar.
“Founders who took enormous personal and financial risk to build something now feel the terms have changed on them without warning. That erodes trust. And when trust erodes, the next generation of founders starts asking whether the UK is really the right place to build.”
For those who miss the April deadline, Hashim urges against panic. “There are still planning opportunities available after April. The worst outcome is a founder who rushes a sale, undervalues their business, and ends up worse off than if they had taken their time and structured the exit properly.”
“The UK needs founders to stay in the game, as investors, as operators, as people who back the next idea. Every rushed exit is a potential gap in that chain.
