The Relief Limit Falls to £500,000: What It Means for Pest Control Owners

What the Budget announced

In our view, many pest control owners will never reach the old limit, and some will not reach the new one. The first job is to work out which side of it you are likely to be on.

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 (HMRC). The 18% rate does not change, and the Budget announced no change to the main Capital Gains Tax rates of 18% and 24%. Legislation is due in Finance Bill 2026-27.

It is a lifetime limit and it takes account of relief already claimed on past gains. So an owner who has already used £500,000 or more would have none left for a disposal after the change.

HMRC estimates that about 75% of roughly 51,000 claimants are unaffected and that about 13,000 individuals are affected. If your gain is likely to be under £500,000, the change may make no difference to you.

What it means in money

For a higher rate taxpayer the relief is worth six percentage points, the gap between 18% and 24%. That is at most £60,000 on a gain of £1 million and at most £30,000 on a gain of £500,000.

Three examples, for a higher rate taxpayer who has claimed no relief before. They leave out the annual exempt amount, costs and any unused basic rate band.

• A gain of £400,000: £72,000 of tax under either limit.
• A gain of £800,000: £144,000 under the £1 million limit and £162,000 under the £500,000 limit, which is £18,000 more.
• A gain of £1.5 million: £300,000 under the £1 million limit and £330,000 under the £500,000 limit, which is £30,000 more.

What the date does and does not mean

A sale takes months and may not complete by April 2027, so this is no reason to rush, and nobody can promise a date. If a sale in the next year or two was already on your mind, you now have a dated reason to find out what the business is worth and how long a sale would take.

The date that counts for tax is normally the date of an unconditional contract, not completion. Specific rules will apply to unconditional contracts signed before the change and completed after it: the £500,000 limit applies unless the parties can show the contract was not entered into for a tax advantage from the timing, and connected parties will also need to show it was entered into for wholly commercial reasons. Signing early is not a simple way to keep the old limit. Take advice from your tax adviser early.

Your gain is not your sale price

The limit applies to the gain, which is what you receive less what the shares or business cost you, and not to the headline price. Before the change means anything to you, you need a realistic idea of that price.

Headline numbers in this sector can mislead. Rentokil Initial's 2024 results show 36 businesses bought that year, 24 of them in pest control, for £182m against £140m of revenue in the year before purchase, about 1.3 times revenue. That is group-wide and global, and it says nothing about what your business would fetch. It does show why a multiple means little until you know what it is a multiple of, and in our view that is the question to settle first.

Before a sale you will need an accountant and a corporate solicitor: who to bring in, and when.