The Autumn Budget in October 2025 brought several changes that directly affect HVAC business owners, particularly those who have been considering selling. While much of the pre-Budget speculation focused on Capital Gains Tax, the tax on the gain when you sell an asset such as your business, the actual announcements were more targeted than many feared, but no less significant for business sellers. Here is what changed, what it means in practical terms, and what you should be thinking about now.
Update, November 2026. The October 2026 Budget announced that the Business Asset Disposal Relief lifetime limit will fall from £1 million to £500,000 for qualifying disposals from the start of the 2027 to 2028 tax year in April 2027. Relief already claimed counts towards the limit, and the 18% rate does not change. For tax, the date of an unconditional contract normally counts as the date of disposal rather than completion, and specific rules will apply to contracts signed before the change that complete after it. Where this page quotes a different limit, rate or date, this note takes priority. Take advice on your own position. What the change means for owners.
Business Asset Disposal Relief: The Key Change
The most consequential change for HVAC business sellers is the increase to the Business Asset Disposal Relief rate, the reduced tax rate on selling a business you own and work in. BADR, formerly known as Entrepreneurs' Relief, allows qualifying business owners to pay a reduced rate of Capital Gains Tax when they sell their business, up to a lifetime allowance of £1 million in qualifying gains.
Before the Budget, the BADR rate was 10%. The Chancellor announced two changes:
- An increase to 14%, which applied from Apr 2025
- A further increase to 18%, in force since Apr 2026
The standard Capital Gains Tax rates were also adjusted. The lower rate moved from 10% to 18%, and the higher rate from 20% to 24%. However, for most HVAC business owners selling a qualifying business, it is the BADR rate that matters most, because the relief is specifically designed for this type of transaction.
What This Means in Real Money
To make this tangible, consider an HVAC business owner who sells their business and makes a qualifying capital gain of £500,000.
At the old 10% rate: Tax of £50,000
At the 14% rate for 2025/26: Tax of £70,000
At the 18% rate in force since April 2026: Tax of £90,000
The difference between completing a sale before April 2026 and after is £20,000 in tax on a £500,000 gain. On a £1 million gain at the lifetime allowance, the difference is £40,000.
These are not trivial sums. For many HVAC business owners, the sale of their business represents the single largest financial transaction of their career, often funding retirement or the next chapter of their professional lives. An additional £20,000 to £40,000 in tax is money that would otherwise be in your pocket.
Employer National Insurance: An Operating Cost Increase
The Budget also increased employer National Insurance contributions. The rate rose by 1.2 percentage points to 15%, and the threshold at which employers start paying NI dropped from £9,100 to £5,000. These changes take effect from April 2025.
For HVAC businesses, this is a direct increase in the cost of employing engineers, office staff, and any other employees. The impact varies by business size, but for a typical HVAC company with six to eight employees, the additional annual cost is likely to be in the range of £5,000 to £12,000.
From a sale perspective, this matters because it affects profitability. Buyers will look at your most recent trading year to assess adjusted net profit, and higher NI costs will reduce that figure unless you have offset them through price increases or efficiency gains. If you are preparing for a sale, factor these increased costs into your financial planning.
What the Budget Did Not Change
It is worth noting what the Budget left untouched. The £1 million lifetime allowance for BADR remains in place. There were no changes to the qualifying conditions for the relief. Corporation Tax rates were not increased. And the standard Annual Investment Allowance of £1 million for capital expenditure remains, which is relevant for HVAC businesses investing in new vans, equipment, or heat pump installation tools.
There was considerable pre-Budget speculation that the lifetime BADR allowance might be reduced or that the qualifying conditions might be tightened. Neither of these materialised, which provides some certainty for business owners who are in the process of planning a sale.
The Timing Question
The staggered BADR increase gave owners a clear incentive to complete a sale before April 2026. However, it was important to be realistic about what that meant in practice. An HVAC business sale typically takes four to six months from the point of going to market to completion. For owners who had not already begun the process, completing before April 2026 required an aggressive timeline.
The 14% rate was a meaningful saving on the 18% rate that took effect in Apr 2026, and every month of delay before April cost money in the form of a higher eventual tax rate. The financial case for acting sooner rather than later was clear.
It is also important not to let tax tail wag the dog. A rushed sale at a lower price can easily cost more than the tax saving. The best outcome is a well-prepared business, sold at a strong price, with the tax implications managed through proper planning with your accountant. The Budget has added urgency, but it has not changed the fundamental principle: preparation drives value.
What You Should Do Now
If you were already considering selling your HVAC business, the Budget has made the financial case for acting more concrete. Speak to your accountant about the specific impact on your circumstances. Consider whether your business is ready to go to market, or whether targeted preparation over the next few months could increase your sale price sufficiently to offset the tax change.
If you were not actively considering a sale, the Budget is a useful prompt to think about your longer-term plans. BADR rates have increased twice in the space of a year, and there is no guarantee they will not increase again in future Budgets. The trend is clear, and the time to plan is now.
We set out who you will need for tax and legal advice, and when to bring them in.
