Why UK Budget triggered mergers and acquisitions 'deal a day' for leading Scottish law firm

Labour’s first Budget in 14 years triggered a rush of business tie-ups and disposals with one leading Scottish legal firm completing more than a deal a day in the run up to October 30.

Harper Macleod said its corporate and M&A (mergers and acquisitions) team advised on 42 transactions in October, as business owners and acquiring companies acted ahead of Chancellor Rachel Reeves’ eagerly-awaited, maiden fiscal statement.

With businesses anticipating a hike in capital gains tax (CGT) and other tax-raising measures, including employers’ national insurance, the team is said to have seen a “marked increase” in corporate mergers and acquisitions activity across a range of sectors and particularly among small and medium-sized enterprises (SMEs) and family businesses.

Harper McLeod

Legal exports noted that while capital gains tax was not raised to the expected levels, transactional activity remained high during November with many businesses continuing to prepare for further reductions in relief from CGT in 2025 and 2026. Harper Macleod is expecting to see similar levels of sales and acquisitions right up to the end of this tax year in April.

Donnie Munro, Harper Macleod’s senior partner and head of the corporate, commercial and regulatory team, said: “Rachel Reeves’ first Budget, and Labour’s first in 14 years, is likely to go down as one which, while trying to ‘rebuild’ Britain, will be viewed by others with a sense of trepidation for the future. Undoubtedly, there are always winners and losers from these major fiscal events.

“It’s fair to say that, in this case, some quarters of the business community were less welcoming of certain measures than others, particularly owners of businesses at the small to medium end of the spectrum, and the farming community.”

He added: “There are short, medium and long term challenges as a result of the Budget. In the short term, from now until the end of this tax year, it’s likely we’ll continue to see the wave of business sales and disposals which we started to see since Labour’s General Election victory, perhaps even earlier, as business owners anticipated a hike in taxes to fund the rebuilding of public services.”

Deal highlights for the period included the sale of Aviemore-based infrastructure and environmental engineering contractor McGowan Group to Brush Group, the sale of the Loch Ness Marathon and Etape Loch Ness to London Marathon Events, and the acquisition by Glasgow-based sustainable packaging and distribution outfit Green Fulfilment of Omni Channel Fulfilment.

Donnie Munro, Harper McLeod | Harper McLeod

Munro added: “Looking at the medium term, this is where we see the impact on the farming and agricultural sectors coming into play more clearly. Previously, the 100 per cent agricultural property relief (APR) and business property relief (BPR) wasn’t necessarily an incentive for farm owners to realise their assets.

“By taxing these assets at 20 per cent after the first £1 million from April 2026 the unintended consequence could easily be the psychological effect of feeling that a sale is necessary to return any value from a lifetime’s hard work.

“Looking longer term, it’s not uncommon for typical farming businesses to be relatively asset-rich but cash-poor, so sales might be necessary to fund future inheritance tax liabilities because nobody wants their families to be burdened with debt.”