The April CGT increase is reshaping the market for acquisitions

The Capital Gains Tax rate increase that came into effect in April is having a noticeable impact on the M&A market. Business Asset Disposal Relief rose from 14% to 18%, and that four-point difference is enough to shift decisions.

A lot of owner-managers who had been thinking about exit in the next year or two are now moving faster. The difference between selling before and after the new rate is material, especially on seven-figure exits. That urgency is creating what several market sources are calling a buyer's market in terms of volume and seller motivation.

For acquirers in fragmented sectors like electrical wholesale, lighting and trade distribution, this creates opportunity. Deal flow is up. Owners who might have waited are now actively looking for buyers. Businesses that had succession on the horizon are bringing it forward. And the willingness to negotiate on price and terms has improved.

The timing coincides with other favourable conditions. Interest rates are stabilising, with the Bank of England signalling a gradual decline to between 3.25% and 3.5% by year end. Major UK banks committed £11 billion in SME lending in January. Acquisition finance is more accessible than it was twelve months ago.

The dynamic isn't without complications. The rush to exit means more competition for quality assets, particularly businesses with strong cash generation or resilience in their sector. And some of the deals being done quickly are by owners reacting to the deadline rather than planning carefully, which can create integration challenges later.

The deadline effect is likely to influence deal velocity through the rest of 2026. Owners who missed the April cut-off are reassessing whether to push ahead now or wait. For consolidators with capital and a clear acquisition strategy, this is a window worth paying attention to.