Capital Gains Tax (CGT) has changed significantly, with rate increases that came into effect from 30 October 2024, and further adjustments to Business Asset Disposal Relief (BADR) from April 2025 and 2026. You may be concerned about what these changes are and how they will impact your business. Luckily, our guide tells you all you need to know. If you are planning on selling any assets, especially your business, it’s essential to plan ahead and understand how these changes could affect your sale.
What are the Capital Gains Tax Rates in 25/26?
For the 2024/25 and 2025/26 tax years, the annual tax-free Capital Gains Tax allowance for individuals is £3,000, and £1,500 for trusts.
This means more of your gains will be subject to tax, likely impacting casual investors and business owners alike. The reduced allowance makes even modest gains – such as from selling shares, second properties, or cryptocurrency – liable for Capital Gains Tax.
Capital Gains Tax Rate Increases – What You Need to Know
The government announced rate increases that began from 30th October 2024 which affect non-property asset disposals, including business shares.
The lower rate has risen from 10% to 18% for business asset disposals. The higher rate has risen from 20%-24% for individuals and businesses. These rates are aligning with residential property CGT rates which were already at 18% for the lower rate and 24% for the higher rate. Ultimately, this causes an additional squeeze on business exits and share disposals.
Changes to Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief) allows qualifying business owners to pay a reduced CGT rate on gains when they sell all or part of their business.
Before 5 April 2025, BADR offered a 10% tax rate on the first £1 million of qualifying lifetime gains. However, from 6 April 2025, BADR rate increases to 14%. And, from 6 April 2026, this will increase again to 18%.
This staggered increase means that selling your business sooner could offer a far more tax-efficient outcome. With rates set to climb steadily, planning the timing of your exit is crucial
If you’re thinking about selling your business, it’s more important than ever to have expert guidance on how and when to do it to ensure you’re maximising the return.
Non-Dom Tax Regime to Be Abolished in April 2025
From April 2025, the current non-domiciled tax regime will be replaced. This means individuals who were previously taxed only on UK income and remitted foreign gains will now be taxed on worldwide income and gains.
While a new temporary relief will apply for recent arrivals, the change poses significant tax implications for long-term non-doms and business owners with international ties. If you fall into this category, effective planning is a must.
Common Assets that are Usually Subject to CGT
It’s important to understand which common assets are subject to Capital Gains Tax, so we’ve listed them below for you.
- Second homes or buy-to-let properties. So, this would not be your main residence as this is usually exempt.
- Shares and investments that are outside of tax-free wrappers, such as ISAs.
- Cryptocurrency.
- Valuable personal possessions worth over £6,000. For example, these could be antiques or jewellery.
- Businesses or business shares.
If you’re unsure whether an asset you wish to sell could be subject to CGT, then simply ask our accountants.
CGT Allowance Planning
With Capital Gains Tax rates having already increased as of 30th October 2024, timing your asset disposals is now more important than ever. If you’re considering selling a business or other high-value assets, planning ahead could still help reduce your tax bill – especially with further changes to Business Asset Disposal Relief on the horizon in April 2025 and April 2026.
Key things to consider:
- Disposals made before April 2025 may still qualify for BADR at the current 10% rate, but this is your last chance to benefit before the relief increases to 14%.
- From 6 April 2025, BADR will rise to 14%, and again to 18% from April 2026, reducing its overall benefit to business sellers.
- You can still spread disposals across multiple tax years to make full use of your £3,000 annual CGT allowance, potentially lowering your total liability.
- Consider gifting assets to a spouse or family member, where appropriate, to split gains and utilise both allowances and lower tax bands.
Even though the window for pre-rate-change disposals has closed, there’s still plenty you can do to minimise CGT – especially if you’re planning a business sale. Get in touch with our accountants to structure your disposals tax-efficiently and avoid paying more than necessary.
Do I Always Have to Pay CGT?
Not necessarily! You may not have to pay or reduce having to pay CGT through:
- Tax reliefs, like Business Asset Disposal Relief.
- Tax-efficient wrappers, such as ISAs and pensions.
- Timing sales carefully across tax years.
- Making use of your spouse’s allowance.
If you’re unsure whether you will need to pay CGT on an asset you plan on selling, get in touch with Graham Wood. We’ll be able to give you expert advice and ensure you’re making your sale compliantly, whilst remaining tax-efficient.
CGT Reporting Rules to Be Aware of
There are some capital gains tax rules you need to be aware of when selling assets.
- Disposals must be reported within 60 days for UK property sales.
- All gains must be reported on Self Assessment, even if within allowance.
- Penalties apply for late or inaccurate reporting.
- Crypto disposals must be tracked and recorded in detail — Please note that HMRC pays close attention to this.
If you want to mitigate the burden of ensuring you’re remaining compliant when making your sale, then get in touch with Graham Wood.
Common CGT Mistakes to Avoid
It’s not worth the penalties form HMRC on common mistakes some businesses make when it comes to their capital gains tax. So, here are our key things to avoid.
It’s crucial to keep accurate records, especially for crypto and shares. Failing to keep the correct records could land you in a messy situation when it comes to selling and reporting the correct records to HMRC.
Don’t ignore other taxes. These could include Inheritance Tax or Stamp Duty on property changes. Improper planning for this could mean you don’t come out with an as higher gain as you anticipated.
Don’t forget to apply reliefs such as Business Asset Disposal Relief or Investors’ Relief.
Minimising CGT in 2025/2026
Act early. Review your asset disposal strategy before rates go up. Make sure you make the most of your £3,000 allowance along with other allowances such as Investors’ relief or business asset disposal relief. Finally, speak to an accountant to identify every opportunity to reduce your tax bill. By following these tips, not only could you make sure you’re minimising your tax liability, but minimise the stress.
Get in Touch with Graham Wood
At Graham Wood, we’re experienced in handling business asset disposals and guiding clients through Capital Gains Tax changes. For clear, strategic advice tailored to your unique situation, get in touch today – or pop into the office for a no-obligation chat.
