Capital Gains Tax (CGT)

• CGT annual exemption is £3,000 (for individuals) and £1,500 (for trusts).
• The CGT annual exemption (along with the personal allowance) is forfeited by those claiming the remittance basis.
• Spouses and civil partners can transfer assets between themselves free of CGT.
• Disposals of UK residential property must be reported to HMRC, and CGT paid, within 60 days of completion of contracts.
• Non‑resident landlords (both individual and corporate) should be aware that disposals of UK property will be liable to CGT but it may be possible to rebase the value of the property when calculating the gain.
• UK resident but non‑domiciled individuals should be aware that offshore capital losses will not be allowable unless they make an election when they first claim the remittance basis.
• Business Asset Disposal Relief (BADR) can reduce the rate of CGT due on disposal of qualifying assets and all or part of your business from 20% to 10% on the first £1 million gains. The rate will increase to 14% from 6 April 2025 and 18% from 6 April 2026.
  • The trading business must have been owned, either as a sole trader or in a business partnership, for the last two years.
  • BADR may be available on associated disposals up to 3 years after a business ceases.
  • An employee’s shares or securities in a trading company may also qualify. The shares must have been held for two years, with at least 5% of the share capital, voting rights, and assets on winding up being held.
  • BADR is also available for Enterprise Management Incentive (EMI) shares acquired on the exercise of an EMI option. The company should not be the individual’s personal company and there is no need for the 5% test to be met. There is no need for the individual to have owned the shares for two years, just that the option was granted at least two years before the disposal.

Capital Gains Tax (CGT) – Rates

Carried interest gains	18%	for gains within the usual basic rate band
Carried interest gains	32%	for gains above the basic rate band (chargeable to income tax under a revised regime from 6th April 2026
Gains on everything else, including residential property:	18%	for gains within the usual basic rate band
Gains on everything else, including residential property:	24%	for gains above the basic rate band.
Where business asset disposal relief applies	14%*	subject to a lifetime limit of £1,000,000
Where investors’ relief applies	14%*	subject to a lifetime limit of £10,000,000
*Rate will increase to 18% from 6th April 2026

 

DA Accountants planning points

• If you are planning on selling an asset, think about putting it into joint names with your spouse / civil partner and utilise their CGT annual exemption / any capital losses.
• If the asset qualifies for BADR, consider accelerating the disposal to before the rate increases.
• Are any of your shares currently of negligible value? If so, a claim can be made to crystallise the capital loss which can then be set against any capital gains.
• If you have sold a business asset, then it may be possible to roll over the gain into a replacement business asset.
• If you are planning on selling your business, or shares in your business, make sure that you have considered the BADR rules, especially if you intend to transfer shares or part of the business to your spouse / civil partner to utilise their BADR entitlement.