By Zohaib Hashim
British tech founders are rushing to sell off following tax overhauls, as experts say the consequences for startups may only be starting to show.
When Chancellor Rachel Reeves announced an overhaul to Capital Gains Tax in the October 2024 Autumn Budget, it set a clock ticking for many of Britain’s tech founders. The decisions made in the final weeks before April are already raising questions about what the UK startup economy has lost, and what comes next.
The Tax Changes That Sparked a Sell-Off
The Autumn Budget raised the headline CGT rate from 20% to 24% for higher-rate taxpayers and introduced a two-stage increase to Business Asset Disposal Relief, the primary relief mechanism used by founders selling their companies. This rate rose from 10% to 14% in April 2025, with a further increase to 18% in April 2026.
For founders sitting on significant equity stakes, the financial consequences were immediate. Blackmont Legal, a leading M&A law firm, reported a sharp rise in instructions from technology industry leaders who were racing to complete sales before the end of the tax year. Zohaib Hashim, founder and CEO of Blackmont Legal, put the numbers plainly: “The financial difference on a £5 million exit can run into hundreds of thousands of pounds.” Unlike salary income, gains on share sales are taxed at CGT rates, making the deadline particularly consequential for anyone who had been weighing up an exit.
Rushed Deals and the Businesses Left Behind
Speed and sound judgment go hand in hand in M&A, and the lead-up to April was no different. Blackmont Legal said founders were now accepting lower valuations, agreeing to unfavourable terms, or walking away from better-suited buyers simply to close before the CGT changes ring in.
“We are hearing from founders who have spent years building their businesses and are now making rushed decisions because of a policy change,” said Zohaib. “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.”
There is also a harder question about the businesses themselves. Companies built over years, sometimes decades, changed hands in a matter of weeks when urgency overrode strategy. The buyer who moves fast is not always the buyer best placed to protect what was built.
The Recycling Effect at Risk
The UK’s startup sector has long relied on a recycling effect. Founders who exit successfully tend to reinvest as angel investors, back the next generation, and take on board roles that early-stage companies survive the hardest years. A wave of rushed, tax-driven exits risks disrupting that cycle.
Zohaib believes the disruption to that cycle is being underestimated.
“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.”
A rushed exit does not simply transfer ownership. It risks pulling experienced operators out of the game entirely. The Treasury gains the tax revenue, but the ecosystem may lose the multiplier effect that follows reinvestment.
Trust, and the Founders Still to Come
Beyond the economics, there is a question of confidence. Founders who spent years building under one set of rules found those rules changed with limited notice. That perception matters when the UK is competing with other markets to attract and keep entrepreneurial talent.
“Founders who took enormous personal and financial risk to build something now feel the terms have changed on them without warning,” Zohaib said. “That erodes trust. And when trust erodes, the next generation of founders starts asking whether the UK is really the right place to build.”
The debate about CGT rates will run on. But the effects of the April rush are already visible in deal rooms, and the full impact on the ecosystem may take years to measure.
What Comes Next
For founders who did not complete a sale before April, the message from Blackmont Legal is straightforward: the deadline has passed, but the options have not. The worst outcome is accepting a poor deal to avoid a tax bill that, with proper structuring, could have been managed.
“There are still planning opportunities available after April,” Zohaib said. “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 next BADR increase, from 14% to 18%, is due in April 2026. Founders still considering an exit have time to approach that threshold on their own terms, with the right advisers and a buyer who reflects the real value of what they have built.
Conclusion
The April deadline has passed, but its effects are still working through the system. Britain’s startup sector depends not just on founders building successful businesses, but on those founders staying active in the economy afterwards, as investors, advisers, and operators who back the next idea. Each exit made under pressure rather than strategy is a potential break in that chain. The question now is whether enough of those founders remain in the game, and whether policymakers will factor that into what comes next.
About the Author
Zohaib Hashim is a solicitor, entrepreneur and founder of Blackmont Legal, an innovative and tech-focused law firm based in Manchester. Established in 2024, the firm specialises in mergers & acquisitions, intellectual property and media and entertainment law. With a background in startups, Zohaib’s work focuses on smart growth, with clients ranging from microbusinesses to multinational corporations.
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