Estate agency owners considering selling their businesses could face an extra £30,000 tax bill if they delay completing a deal until next April.
The warning follows the Chancellor’s decision to halve the lifetime Business Asset Disposal Relief (BADR) limit from £1m to £500,000.
The change takes effect on 6 April 2027 and could have significant implications for owners of established estate and letting agencies.
Lucy Noonan, founder of Atomic Consultancy, is urging owners contemplating an exit to start planning now.
Under the new rules, qualifying gains within the reduced allowance will attract an 18% Capital Gains Tax rate. Gains above the limit could face the standard higher rate of 24%.
For an agency owner with qualifying gains of £1m or more, the difference could amount to £30,000.
The Treasury estimates that three-quarters of BADR claimants will still receive relief on their entire gain.
However, owners of larger agencies, particularly those with multiple branches or substantial lettings portfolios, could face higher tax bills.
The clock is ticking for agency owners
Noonan warned that selling an agency takes time, with valuations, negotiations, due diligence and legal work often stretching over several months.
“Today’s Budget gives agency owners a clear deadline. If you complete your sale before 6 April 2027, you can still use the full £1 million Business Asset Disposal Relief allowance. Leave it until after April and anything above £500,000 will be taxed at 24% instead of 18%.
“Small and medium sized businesses are the backbone of our industry, and this is yet another blow for them. Owners have spent years building their agencies, and once again they are the ones being penalised.”
She added: “Selling an agency isn’t something that happens in a few weeks. Valuation, finding the right buyer, due diligence and the legal work all take time, so anyone who wants to complete before April needs to be having that conversation now, not in the new year.”
Noonan said buyer demand for established estate and letting agencies remains strong. Atomic Consultancy claims to have more than 10,000 registered buyers on its books.
What happens to deals already underway?
The government has indicated that transitional rules will apply to sales agreed before 6 April 2027 but completed afterwards.
However, it has yet to publish the full details, leaving some uncertainty for agency owners negotiating a sale.
The Budget also included plans for a new Founders’ Relief, offering a 10% tax rate on up to £10m of lifetime gains.
The proposed relief appears to target founders and early investors in high-growth businesses. A technical consultation runs until 30 November 2026.
Agency owners should not assume they will qualify.
Noonan added: “Tax should never be the only reason to sell, but it’s something every owner needs to understand. My advice is simple: speak to your accountant about your own position, and talk to an acquisition specialist early so you have options rather than a rush.”
