A growing number of UK entrepreneurs are contemplating selling their businesses earlier than planned in the wake of recent tax changes, according to a survey.
The survey, commissioned by UK wealth manager and subsidiary of Quintet Private Bank, Brown Shipley, the poll of 4,000 UK adults, found that nearly 38 per cent of entrepreneurs are now considering an earlier sale due to tax changes announced in Rachel Reeves’s 30 October 2024 Budget.
Additionally, 44 per cent of business owners believe that the increase in National Insurance will significantly impact their business growth plans.
More than one-third (36 per cent) of respondents expressed their intention to sell their business entirely to crystallise value and better manage their wealth—a sharp rise from 21 per cent in January 2024.
Growing focus on financial risk and external investment
Managing financial risk is becoming a greater priority, with an increasing number of entrepreneurs seeking external investment to diversify their financial exposure, the report highlighted. According to the survey, the percentage of business owners planning to seek investment in their companies within the next 12 to 36 months has risen considerably, from 25 per cent in January 2024 to 40 per cent in December 2024. In addition, 37 per cent are pursuing investment as part of their company’s strategic growth plans.
Despite changes to UK inheritance tax for businesses, a third of entrepreneurs intended to reduce their equity in their company while keeping ownership within the family as part of their generational wealth strategy. Interest in this approach varied significantly by age, with 49 per cent of entrepreneurs aged 18-34 expressing interest, compared to just 10 per cent of those aged 55 and over.
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Similarly, 36 per cent of business owners planned to reduce their ownership through internal succession to employees, with younger entrepreneurs leading the way (53 per cent of those aged 18-34 versus 9 per cent of those aged 55 and older).
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Increased confidence in financial planning
Despite the uncertain economic climate, entrepreneurs are showing greater confidence in their financial planning. Of those asked, 54 per cent of respondents expressed confidence in the steps they have taken, up from 47 per cent in January 2024. This confidence is particularly strong among younger entrepreneurs, with 68 per cent of those aged 18-34 feeling assured about their financial planning strategies.
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Commentating on the report, Simon Smith, head of private banking, South at Brown Shipley, said: ‘Confidence in the UK market is more challenging than it has been, and entrepreneurs are carefully assessing their options,’ said Smith. ‘In addition to business sentiment, many are considering how inheritance tax changes will impact the legacy of their businesses. Succession planning and wealth preservation remain key considerations for entrepreneurs looking to sell or pass on their businesses to future generations.’
As tax policies evolve and economic uncertainties persist, UK entrepreneurs are adapting their strategies to safeguard their financial futures—whether through early business sales, external investments, or careful succession planning.
