2025 UK Autumn Budget – Capital Gains Tax

UK Autumn Budget 2025, Capital Gains Tax, Resident and Non resident individuals, CGT and Corporation Tax.

Today, Wednesday, 26^th November 2025. the Chancellor, Rachel Reeves, announced a number of changes to Capital Gains Tax (CGT), effective immediately.  The change, the majority of our clients have reacted to, is the reduction of the Capital Gains Tax Relief business owners/shareholders receive when they dispose of shares in their company to an employee ownership trust (“EOT”), from 100% to 50% of the gain on the shares being disposed of.

Before the UK Autumn Budget, provided certain criteria were met, the Capital Gains Tax Relief allowed business owners/shareholders full relief from any CGT arising on a disposal of their shares to an EOT.

From today, those individuals selling to an EOT will now be liable to CGT. It is important to note that it will not be possible to claim Business Asset Disposal Relief (“BADR”) or investors’ relief on the 50% of the gain that’s taxable.

For further information on Employee Ownership Trusts (EOT) please click: https://www.gov.uk/government/publications/capital-gains-tax-employee-ownership-trusts/capital-gains-tax-employee-ownership-trusts-relief-reduction

Incorporation Relief

Incorporation Relief allows sole traders or partners in a partnership to transfer their business, as a going concern, to a company, in exchange for shares, without triggering a Capital Gains Tax liability, provided certain conditions are met.  This Relief can reduce or eliminate the chargeable gain arising on disposal.

From 6th April 2026, Incorporation Relief will no longer apply automatically and in order to claim the Relief, the following must be provided to HMRC: (i) the type/nature of the business being transferred, (ii) full details of the transaction as well as (iii) supporting calculations and figures.  Previously, Incorporation relief was given automatically on the transfer of a business to company, wholly or mainly, in exchange for shares. This new measure will effect transfers of businesses made on/after 6^th April 2026.

For further information on Incorporation Relief, please click: https://www.gov.uk/government/publications/capital-gains-tax-incorporation-relief-claims/capital-gains-tax-incorporation-relief-claims-process

Anti avoidance – Share Exchanges and Reorganisations

From 26^th November 2025, the new legislation targets situations where an individual, company or trust enters into an arrangement, the main or one of the main purposes of which, is to secure a tax advantage, not otherwise available.  In other words, the focus of the amendments to the anti-avoidance measures, in relation to share exchanges and reorganisations, is on the purpose or the reason for the reorganisation and whether or not the main reason for the reorganisation was for the purposes of tax avoidance. The aim of this amendment is to make the scope of the relief more effective.  It should not adversely affect anyone who does not benefit from the arrangements.

For further information on the new anti-avoidance that applies to Share Exchanges and Company Reorganisations, where the main purposes is tax avoidance, please click: https://www.gov.uk/government/publications/capital-gains-tax-share-exchanges-and-reorganisations/capital-gains-tax-anti-avoidance-for-share-exchanges-and-reorganisations

Non-resident Capital Gains Tax

The rules around Non-Resident Capital Gains Tax are being tightened.  Loopholes for indirect disposals have been closed in relation to non-resident capital gains tax.  Non-UK residents are liable to UK Capital Gains Tax in relation to chargeable gains arising on the disposal of interests in UK land and holdings in “property rich” entities.  From 26^th November 2025, the definition of property-rich entities is to change in relation to Protected Cell Companies (PCC).

Protected Cell Companies are a type of company which is divided into a number of separate cells. The assets and liabilities of each cell are segregated and kept separate from each other cell.  From 26^th November 2026, when determining whether a company derives 75% of its value from UK land, each cell of a PCC must now be considered separately.  In other words, each individual PCC cell must be examined for “property richness” purposes as opposed to the entire PCC as was the case prior to 26^th November 2025.

This Budget change will apply to disposals made by PCCs on/after 26th November 2025.

For further information on Non-Resident Capital Gains Tax, please click: https://www.gov.uk/government/publications/capital-gains-tax-non-resident-capital-gains/non-resident-capital-gains

Final points:

• The annual Capital Gains Tax exempt amount will remain at £3,000 for the 2026/27 tax year.

• The rate for individuals claiming Business Asset Disposal Relief will increase to 18% for disposals made/after 6th April 2026.

For further information in the 2025 UK Autumn Budget, please click: https://www.gov.uk/government/publications/budget-2025-document/budget-2025-html

We provide a full and comprehensive UK tax service.  If you are looking for UK tax advisory or compliance services, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.