Imagine you own a finely tuned machine. For years, you have built it, maintained it and improved it. One day, you learn that the cost of extracting value from that machine is about to rise. Nothing dramatic. Just four percentage points. Yet in financial terms, that shift is not cosmetic. It alters behaviour, timing and structure.
This is precisely the situation many UK business owners now face.
Business Asset Disposal Relief currently allows qualifying gains to be taxed at 14 percent. From April 2026, that rate rises to 18 percent. Four points may sound modest but when capital events enter the conversation, small percentages behave like leverage.
A £1 million gain taxed at 14 percent produces a liability of £140,000.
The same gain at 18 percent yields £180,000.
That £40,000 difference is not an accounting curiosity. It is a strategic variable.
For founders operating within a Mural Crown Self-Administered Family Office structure, the change introduces an interesting opportunity. Not a loophole. Not a gimmick. Simply a question of timing and design.
Let us walk through the mechanics in plain English.
The Core Problem: Capital That No Longer Serves a Purpose
Many founders accumulate value unevenly.
A trading company grows. Assets are acquired. Investments are made. Later, pieces are sold, refinanced or reorganised. Capital builds up, then becomes idle. It sits inside structures where its economic function has faded.
This surplus capital often behaves like ballast in a vessel. Harmless at first glance, yet subtly inefficient.
The BADR rate shift sharpens the question:
Should unnecessary capital remain locked when extraction becomes more expensive?
Within a Mural Crown SAFO framework, the answer frequently leans towards restructuring rather than simple withdrawal.
Why?
Because the SAFO is designed less like a bank account and more like a control system.
Step One: Establishing the Capital Architecture
At its heart, the SAFO separates economic components.
Think of it as dividing the machine into modules:
• Governance and control
• Fixed capital value
• Future growth
• Income participation
Redeemable Capital Participation Shares, often called Freezer Shares, sit within the fixed capital layer.
Their role is deceptively simple.
They anchor value.
Instead of value floating unpredictably with company performance, these shares fix a defined capital position. Growth then accrues elsewhere, typically in growth-oriented equity classes.
For the founder, this arrangement produces several advantages:
• Value stability
• Structured redemption mechanics
• Eligibility for reliefs such as BADR, BPR and potentially SSE
The shares act rather like a financial flywheel. They store economic energy without transmitting volatility into governance or succession planning.
Step Two: Recognising Surplus Capital
Now consider a founder who recently sold assets.
Perhaps a property disposal. Perhaps a subsidiary exit. Perhaps retained profits accumulated beyond operational needs.
The SAFO structure reveals something that traditional ownership often obscures.
Not all capital is strategically useful.
Capital that once had a purpose may now be redundant. It contributes little to control, growth strategy or risk management.
Leaving it untouched is not inherently wrong. Yet when tax rates shift, inertia acquires a cost.
Step Three: The £1 Million Question
Suppose £1 million of capital participation value is no longer required.
Two scenarios emerge.
Scenario A: Redemption after April 2026
Tax at 18 percent → £180,000 liability
Scenario B: Redemption before April 2026
Tax at 14 percent → £140,000 liability
Difference → £40,000
This is where timing behaves like engineering rather than accounting.
The founder is not altering economics.
The founder is altering the extraction efficiency.
Step Four: Why Redemption Rather Than Dividend?
A natural question arises.
Why redeem shares instead of paying dividends?
Because dividends and capital are taxed differently. More importantly, they represent different financial events.
Dividends are income flows.
Redemptions are capital crystallisations.
Freezer Shares exist specifically to facilitate capital events in a controlled, legally defined manner.
Redemption:
• Reduces capital base
• Preserves governance equilibrium
• Aligns with BADR mechanics where conditions are satisfied
Dividend extraction, by contrast, disturbs income tax dynamics and may introduce planning friction.
Structurally, redemption is more like removing a component from a machine than redirecting its fuel supply.
Step Five: The Legal Mechanics of Redemption
From a legal standpoint, redemption is not improvisation.
It follows established corporate processes:
Articles must permit redemption
Board approval is required
Solvency conditions must be satisfied
A proper valuation framework must exist
Company law procedures must be observed
The redemption does not represent value creation.
It represents value conversion.
Capital embedded in shares becomes realised proceeds.
Provided the shares meet qualifying conditions, BADR treatment may apply.
The emphasis here is always procedural discipline.
Tax reliefs rarely collapse due to intention.
They collapse due to execution defects.
Step Six: Behavioural Insight: The Hidden Benefit
There is also a psychological dimension.
Founders often hesitate to redeem capital because redemption feels like reduction.
Yet structurally, redemption can represent optimisation.
Consider an aircraft carrying excess fuel long after a route change. The pilot is not weakening the aircraft by adjusting the load. The pilot is restoring efficiency.
Capital behaves similarly.
Unnecessary capital inflates tax exposure, valuation complexity and estate calculations.
Strategic reduction can strengthen long-term design.
Step Seven: The Relief Interaction
Within a properly designed SAFO:
• BADR governs capital gains treatment
• BPR influences inheritance dynamics
• SSE shapes corporate disposal efficiency
Freezer Shares function as a bridge between these regimes.
They allow capital to be:
• Stabilised
• Extracted
• Rebalanced
• Redeployed
The founder gains something unusual.
Control over timing without surrendering structural integrity.
Step Eight: Why Clearance Follows Redemption
After redemption, many founders pursue HMRC clearance.
Not because redemption requires retroactive permission but because clearance offers interpretative certainty.
Tax legislation often resembles a rulebook written in technical dialect. Clearance transforms ambiguity into defined positions.
The request essentially asks:
"Have we applied the rules correctly, given our specific facts?"
For founders managing significant capital movements, this step provides peace of mind rather than a technical necessity.
Certainty itself has economic value.
Risk reduction is rarely visible on a balance sheet, yet deeply visible in decision-making confidence.
Step Nine: The Strategic Timing Window
The BADR rate increase introduces a temporary planning window.
Not an artificial window.
A legislatively created one.
Founders with redeemable capital layers possess an unusual degree of flexibility:
• They can crystallise capital now
• Or accept higher taxation later
The SAFO structure does not manufacture tax advantages.
It manufactures decision optionality.
Step Ten: The Broader Lesson
This entire exercise reveals a deeper principle.
Most tax inefficiencies are not caused by high rates.
They are caused by structural rigidity.
When ownership, income, growth and control are entangled, timing choices shrink. Decisions become reactive rather than strategic.
The Mural Crown SAFO model, particularly when paired with redeemable capital participation shares, transforms capital management into a controlled system.
Rather than asking:
"How do I minimise tax?"
The founder begins asking:
"How do I design flexibility?"
Tax outcomes then follow structural logic.
Final Reflection
Four percentage points.
That is all.
Yet those four points influence behaviour much like a small change in friction affects mechanical efficiency. Barely noticeable at rest. Material at scale.
For founders with surplus capital embedded in redeemable Freezer Shares, the choice is rarely dramatic.
It is architectural.
Redeem unnecessary capital at 14 percent.
Or preserve it and accept 18 percent later.
Neither path is inherently correct.
But only one reflects deliberate engineering.
And in wealth structuring, engineering almost always outperforms improvisation.
