For business owners planning their exit, the 2026 Budget introduces a meaningful shift.

The capital gains tax exemption on the sale of a small business by individuals aged 55 and older has increased from R1.8 million to R2.7 million. At the same time, the definition of a qualifying small business has been expanded, with the asset value threshold rising from R10 million to R15 million.

This adjustment brings the relief more in line with current market conditions and significantly broadens its applicability.

For many owners, the sale of a business is the primary retirement strategy. The increase in the exemption directly improves the after-tax value of that exit.

Qualification, however, is specific.

The relief applies to individuals aged 55 or older disposing of a business with a total market value not exceeding R15 million. All assets are included in this calculation, regardless of their nature, while liabilities are excluded.

For partnerships and companies, the threshold applies to the total value of the business, not the individual share. A business exceeding R15 million in total assets will not qualify, even if each owner’s interest falls below that level.

The exemption is capped at R2.7 million over a lifetime and is applied on an asset-by-asset basis.

Additional conditions apply. Assets must have been held for at least five years, and the individual must have been actively involved in the business during that period. These requirements introduce complexity, particularly where ownership structures or asset bases have changed over time.

The implications extend beyond tax.

This relief supports succession planning, facilitates ownership transitions, and enables more efficient exits. It creates an opportunity to unlock capital while maintaining continuity within the business or broader economy.

For owners approaching retirement, timing becomes critical.

Valuation, structure, and the sequence of disposal all influence the final outcome. Misalignment in any of these areas can reduce or eliminate the benefit.

The increase in the exemption creates opportunity, but only where it is planned correctly.

A structured approach to the sale, supported by accurate valuation and clear understanding of the rules, will determine how much of this benefit is ultimately realised.