The Autumn Budget on 30 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 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.
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. 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:
- Immediate increase to 14%, effective from 30 October 2025
- Further increase to 18%, effective from 6 April 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 current 14% rate: Tax of £70,000
At the April 2026 rate of 18%: 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 creates a clear incentive to complete a sale before April 2026. However, it is important to be realistic about what that means in practice. An HVAC business sale typically takes four to six months from the point of going to market to completion. If you have not already begun the process, completing before April 2026 would require an aggressive timeline.
That said, even if you cannot complete before April, the current 14% rate still represents a meaningful saving compared to the 18% rate that takes effect in April 2026. Every month of delay between now and April costs money in the form of a higher eventual tax rate. The financial case for acting sooner rather than later is 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.
