Budget 2026: Capital Gains Tax (CGT)
CGT rates and allowances
These have remained largely unchanged with the Annual Exemption remaining at £3,000 for individuals and £1,500 for Trusts. The standard rates of CGT remain unchanged at 18% for basic rate tax payers and 24% for higher and additional rate tax payers.
Gravita’s view
Well, at least the CGT rate did not go up, which many had feared. The annual exemption remains so low as to be almost not worth having though, especially for Trusts and for those who supplement their retirement income through managing their investments.
Business Asset Disposal Relief lifetime limit reduction
For disposals taking place on or after 6th April 2027 the lifetime limit for BADR will be halved from £1 million to £500,000. Qualifying disposals will suffer tax at a reduced rate of 18% rather than the standard 24%.
There are special provisions that apply to contracts entered into before 6th April 2027 that have not been completed, and for certain share reorganisations and exchanges of securities not completed, before 6th April 2027.
Gravita’s view
This is a far cry from the previous £10 million allowance at 10%. The current reduction could cost someone and additional £30,000 after next April.
If you are looking to sell your business in the coming years, this may well accelerate your thinking as £30,000 is always worth having!
Late filing penalties for returns for disposals of UK land
Currently individuals are subject to a 60-day filing requirement on the disposal of UK land and property, with penalties applying where this deadline is missed.
With immediate effect, the legislation will be amended so that the penalties will stop accruing if the person later reports the disposal on their Self-Assessment return.
Gravita’s view
It always seemed crazy that you would continue to suffer further penalties after you had told HMRC about the disposal and paid the tax, albeit in a different way than they ask for.
Capital Gains Tax Relief for gifts of business assets
Modernisation of the way Gift Hold Over Relief on the disposal of qualifying shares and securities will take effect from 6th April 2027, aimed as dealing with the restriction of the relief is applied in relation to intangible fixed assets and where substantial shareholder exemption applies by bringing them back into the relief. There will still be restrictions in relation to assets not used in the trade.
Gravita’s view
This appears to be what the Chancellor hinted at in his speech when he commented about protecting passing on family businesses. Yes, it does provide some relief for those whose businesses include Intangibles but it does not go far enough and is not what we were hoping for.
Gains of offshore companies attributed to UK residents etc: Protected Cell Companies
With immediate effect, changes will be introduced which amend the capital gains participator rules for non-resident close companies, to ensure that they apply to protected cell companies too.
Gravita’s view
If you do not know what a Protected Cell Company (PCC) or Incorporated Cell Company (ICC) is then this probably will not mean anything to you, but for those that do, this will probably make sense – albeit you may not be happy about it!
Broadly a PCC or ICC are a different sort of corporate structure that we do not have in the UK. In simple terms, they consist of several cells (which you can think of as companies) that exist independently from each other but are all within the same rapper. If you visualise it, they will look just like a cell that you drew in biology class at school. They are often used in the insurance industry and with large scale investments and are usually structured through the Channel Islands where they are both doable and popular.
Capital Sums in return for Surrender of Rights
From the date of the Budget, amendments will be made to the the capital gains legislation to provide that a capital sum received under a contract for loss of right under that contract is in scope for CGT purposes. This covers compensation payments, damages and capital sums received for forfeiting or not exercising those rights, which will now be subject to CGT.
Gravita’s view
Helpful clarification over one of those things that most people probably assumed was not taxable. Or subject to income tax. Or maybe CGT.
Exit charges for Temporarily Migrating Trusts
Currently, when the trustee of a trust becomes non-resident, there is an exit charge for CGT purposes, where all assets are deemed to be re-acquired at market value and taxed on the deemed gains.
With immediate effect, there will be an administrative easement to the charge that otherwise applies when a trust ceases to be resident in the United Kingdom. An exit charge will not apply when a trust becomes UK resident because one of its trustees moved to the UK; and it ceases to be UK resident later that year or the following year.
Gravita’s view
This will be a welcome change for those that would otherwise have been caught out, often for reasons that are completely out of their control.
Similar Insights
Budget 2026: Personal tax
Budget 2026: Inheritance Tax
Budget 2026: Stamp Duty Land Tax and Stamp Duty
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