What Could Andy Burnham’s Tax Plans Mean for Owners Selling FCA-Regulated Businesses?

Anyone considering selling an FCA-regulated business over the next 12 to 18 months is likely to have one eye on the tax position. While Andy Burnham’s government has yet to announce detailed reforms to Capital Gains Tax (CGT), he has repeatedly argued that wealth should bear a greater share of taxation and has declined to rule out changes to CGT or the introduction of a targeted wealth tax.

For owners of financial advisers, insurance brokers, consumer credit firms, payment institutions and other FCA-authorised businesses, the immediate concern is straightforward: could a future Budget increase the tax bill on a business sale? If so, that has implications not only for when a transaction completes, but also for how it is structured and negotiated.

Capital Gains Tax remains the key issue

Most shareholders selling an FCA-regulated company will pay Capital Gains Tax on the difference between the sale proceeds and the allowable cost of their shares. For the 2026/27 tax year, CGT is generally charged at 18% where gains fall within the available basic rate band and 24% above that, with an annual exempt amount of £3,000.

The speculation centres on whether those rates could rise. Burnham has argued that the tax system places a heavier burden on income from work than on wealth, leading many commentators to suggest that CGT could be moved closer to income tax rates. No such policy has been confirmed, but the possibility is enough to prompt questions from business owners already considering an exit.

Even a relatively modest increase could make a significant difference. A five-percentage-point rise on a £2 million taxable gain would increase the tax liability by £100,000 before taking account of any available reliefs.

That does not necessarily mean sellers should rush to complete a transaction.

In practice, the sale of an FCA-regulated business is rarely something that can be accelerated simply because of political speculation. Buyers still need to complete due diligence, negotiate warranties and indemnities, secure funding and, where required, obtain regulatory approval. Attempting to force an unrealistic timetable may reduce competitive tension or weaken the seller’s negotiating position without delivering any tax advantage.

Business Asset Disposal Relief

Business Asset Disposal Relief (BADR) remains one of the most valuable reliefs available to qualifying business owners. Subject to satisfying the statutory conditions and the £1 million lifetime limit on qualifying gains, disposals may benefit from the reduced CGT rate, which increased to 18% from 6 April 2026. HMRC’s published guidance confirms the current rates.

Whether the relief remains unchanged is ultimately a political decision. A future government could increase the applicable rate, reduce the lifetime limit, tighten the qualifying conditions or abolish the relief altogether. Equally, it may conclude that preserving BADR continues to encourage entrepreneurship while broader CGT reforms are introduced elsewhere.

Owners should review their eligibility well before beginning a sale process. Issues such as recent share reorganisations, different classes of shares or substantial non-trading activities can affect entitlement, and identifying potential problems early is usually far easier than trying to resolve them during a live transaction.

Deal structure may become even more important

If CGT rates increase, the way a transaction is structured becomes even more significant.

Many acquisitions of FCA-regulated businesses include deferred consideration, earn-outs, retentions or completion accounts. The tax treatment depends on the legal documentation and the facts of the transaction rather than simply when the seller receives the money.

Earn-outs illustrate the point. Depending on how they are drafted, tax may arise by reference to the value of the earn-out at completion rather than when future payments are received. Different rules can apply where consideration includes securities or where payments are connected with continuing employment.

That distinction is particularly important for owner-managed businesses. Where part of the consideration is, in substance, remuneration for remaining with the business after completion, HMRC may seek to tax those amounts as employment income rather than capital gains.

Share-for-share exchanges can also defer a capital gain in some circumstances, although anti-avoidance provisions, clearance issues and the commercial value of the shares received all require careful consideration. Tax should never be the only factor driving the structure of a deal.

FCA approval can influence tax timing

Unlike many private company sales, transactions involving FCA-authorised firms often require regulatory approval before completion. A buyer must not acquire or increase control beyond the relevant thresholds until the FCA’s change in control process has been completed.

That creates an important distinction between signing and completion.

The parties may agree and sign the sale documentation months before the transaction actually completes. If tax rates change during that period, determining the date of disposal for CGT purposes becomes critical. Much will depend on whether the agreement is unconditional or remains subject to genuine conditions precedent, including regulatory approval.

This is an area where tax law and regulatory law intersect. The drafting of the sale agreement should accurately reflect the commercial and regulatory reality, rather than attempting to create an artificial disposal date that may not withstand HMRC scrutiny.

Buyers are watching developments too

Tax uncertainty affects buyers as well as sellers.

Where there is speculation about future tax changes, purchasers may encounter sellers who are keen to complete before a Budget. Buyers, however, remain focused on valuation, regulatory risk and post-completion integration. They are unlikely to compromise due diligence or commercial protections simply to accommodate a seller’s tax concerns.

As a result, owners should avoid assuming that a future tax announcement will automatically strengthen their negotiating position. In many cases, the opposite may prove true.

What about a wealth tax?

Although proposals for a wealth tax continue to attract media attention, they are unlikely to affect most business owners selling FCA-regulated companies.

One widely reported proposal suggested a 2% annual charge on households with wealth exceeding £100 million, potentially affecting fewer than 1,000 families while raising around £10 billion each year. If measures of that nature were ever introduced, they would primarily concern ultra-high-net-worth individuals rather than the typical owner-managed business.

For the overwhelming majority of sellers, Capital Gains Tax remains the issue most likely to influence transaction planning.

Preparation is still the best strategy

Political speculation alone should not dictate the commercial terms of a business sale. Equally, owners who expect to sell over the next year should not wait for a Budget before reviewing their position.

Preparing early remains one of the few variables a seller can genuinely control. Reviewing the corporate structure, shareholder arrangements, regulatory permissions and potential entitlement to tax reliefs before marketing the business can identify issues while there is still time to address them. The same applies to considering how deferred consideration, earn-outs and any continuing management role should be documented.

For FCA-regulated businesses, transactions often take months rather than weeks because regulatory approvals cannot be rushed. Businesses that are ready for due diligence, regulatory scrutiny and buyer negotiations will be far better placed to respond if tax policy changes than those trying to reorganise at the last minute.