UK Inheritance 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, and wish to deal with a U.K. Tax Specialist, 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.

Inheritance Tax (IHT), UK Taxes, Capital Acquisitions Tax.

The 2024 Autumn Budget announced a series of changes to UK Inheritance Tax.  As you’re aware, in the UK, Inheritance Tax is a tax payable on the value of a deceased person’s estate.  This differs to Irish Capital Acquisitions Tax where the beneficiary pays CAT on gifts and/or inheritances.

Current Rules

Currently, UK IHT is charged at 40% on the value of an estate above the tax-free allowance i.e. the Nil Rate Band of £325,000. This tax-free allowance can be further increased by a Residential Nil Rate Band of £175,000 providing you leave your home to direct descendants i.e. children, step children, grandchildren, etc.  As a result, this brings up the total tax-free allowance to £500,000 per person.  In certain circumstances, this could potentially equate to £1 million for a couple.  These thresholds were fixed until April 2030 in the Autumn Budget.  If, however, your estate is worth less than £325,000 when you die, then any unused amount up to the threshold limit can be added to the surviving spouse’s/partner’s threshold amount.

New Rules

From 6^th April 2025, the rules for taxing non-UK domiciled individuals will be replaced by a tax residence-based system.  This will apply to long-term residents owning non-UK property who were previously outside the scope of UK Inheritance Tax.  UK assets will always remain within the scope of inheritance tax.  Therefore, from 6th April 2025 onwards, individuals who have held non-domicile status will no longer be exempt from Inheritance Tax on their foreign assets. Instead tax will be based on the individual’s residency status.

Non-UK assets will be within the scope of UK Inheritance tax if an individual qualifies as a long-term resident.  This means that anyone who has been resident in the UK for ten out of the last twenty years will be subject to Inheritance Tax on their worldwide assets.  This is assessed using the same statutory residence test currently applied for Income Tax and Capital Gains Tax purposes.  It’s important to keep in mind that where an individual ceases to be UK resident after 6th April 2025, there will be an “IHT tail.”  This effectively means that an individual can remain within the scope of UK Inheritance Tax, on their worldwide assets, for a period of up to ten years after ceasing their UK residence.

In summary, from 6th April 2025, the concept of domicile will no longer determine exposure to inheritance tax.  Instead, it will be replaced with the concept of a long-term resident.

For further information, please click:

https://www.gov.uk/inheritance-tax

https://www.gov.uk/government/publications/2024-non-uk-domiciled-individuals-policy-summary/changes-to-the-taxation-of-non-uk-domiciled-individuals

For all your Irish or cross-border gift or inheritance concerns, please contact us on 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.

Inheritance Tax, UK IHT, UK Taxes, Agricultural Property Relief, Business Property Relief, Gift and Inheritance Tax

The UK Autumn Budget 2024 announced changes to the current Agricultural and Business Property Inheritance Tax regimes.  From 6^th April 2026, the combined Agricultural Property Relief and Business Property Relief will be restricted to the first £1 million on “qualifying assets.”  The Chancellor of the Exchequer delivered her Budget on 30th October 2024, announcing 100% relief for the first £1 million pounds of combined assets and 50% Relief thereafter.  Currently, Agricultural Relief offers two potential rates of Inheritance Tax Relief.  These depend on the circumstances of ownership. These rates will remain in place until 5^th April 2026.

Old Regime – Agricultural Property Relief

What is Agricultural Property Relief?

Agricultural Property Relief is an Inheritance tax relief for farmers and landowners.  It provides for either 50% or 100% relief on the agricultural value of land and certain buildings.

What conditions must apply?

For the 100% Relief to apply:

1. the property must be in the owner’s vacant possession i.e. the owner or transferor has the immediate right to vacant possession of the property or the right to obtain it within the next twelve months.

2. the land must be let with the tenancy having commenced on/after 1st September 1995.

3. the land must be let and conditions regarding vacant possession must be complied with – This applies by concession.

4. the owner had been entitled to his interest in the property since before 10th March 1981 and has met the conditions for ‘Working Farmer Relief”.

What happens if all the above conditions aren’t met?

The 50% Relief is available in circumstances where the above conditions aren’t met.

What happens if the property is owner-occupied?

If the property is owner-occupied, it must have been owned and used for agricultural purposes for at least two years ending with the date of the transfer.  If, however, the property is let to a tenant, it must have been owned by the transferor for at least seven years, ending with the date of the transfer, and the land must have been actively farmed during that time.  The property must not be subject to a binding contract of sale on disposal.

What about successive transfers?

Additional rules apply in relation to successive transfers.

What does Agricultural Property include?

Agricultural property includes agricultural land or pasture, grazing land, cottages, farmhouses, farm buildings, woodlands and buildings used in intensive animal rearing, etc.

Old Regime – Business Property Relief

What is Business Property Relief?

Business Property Relief is a relief from IHT which applies to the transfer of relevant business property.  100% relief is available on the following assets (i) a business or interest in a business operating as a sole trade or partnership and (ii) shares in an unlisted trading company which the donor has owned for a minimum of two years

Are there specific rules on the transfer of shares in a quoted trading company?

50% Relief is available on the transfer of shares in a quoted trading company where the donor has a controlling interest (i.e. 51%) in the company.  The 50% rate also applies to land and buildings, including plant and machinery, where those assets are used by the donor’s partnership or by a company they control.

What about lifetime gifts?

With regard to lifetime gifts, Business Property Relief is only available on death provided the donee still owns the relevant business property at the time of death.

What if the business owns investments?

If the business owns investments, Business Property Relief is restricted to the business assets. In other words, BPR does not apply to any ‘excepted assets’ in the balance sheet. An ‘excepted asset’ is one which is not used wholly or mainly for the purposes of a trade.

New Regime

From 6^th April 2026, the combined Agricultural Property Relief and Business Property Relief will only be available on the first £1 million on qualifying assets. If the individual owns qualifying assets above this threshold amount of £1 million, the rate of the Relief will be reduced to 50% of the excess.

What does that mean?

This means, from 6^th April 2026, an effective IHT tax rate of 20% will apply to the value of qualifying assets above £1 million.

What happens Assets that automatically qualify for the 50% Relief Rate?

Assets automatically qualifying for the 50% relief rate will not use up the £1 million allowance.

What happens to any unused part of the £1 million allowance?

It’s important to keep in mind that any unused part of the £1 million allowance cannot be transferred between spouses in the way that the NIL Rate Band can.

What does this allowance not apply to?

This allowance will not apply to AIM-listed shares and other similar shares not listed on a recognised stock exchange.  Instead, they will be entitled to the 50% rate of Relief.

How long do the new rules apply?

The new rules will apply for lifetime transfers on/after 30th October 2024 in situations where the donor dies on/after 6^th April 2026.

How can this Inheritance Tax liability be paid?

The Inheritance Tax liability arising on assets which qualify for Agricultural Property Relief and Business Property Relief can be paid by way of equal annual instalments, over a ten-year period, in certain circumstances.

Are there any exemptions?

Full exemptions for transfers between spouses and civil partners will continue to apply i.e.  any agricultural and business assets left to a surviving spouse or civil partner will be tax free.

For further information, please click:

https://www.gov.uk/government/publications/agricultural-property-relief-and-environmental-land-management

https://www.gov.uk/government/news/what-are-the-changes-to-agricultural-property-relief

Following the Inheritance Tax changes in the Autumn Budget 2024, it’s time to consider the practical consequences and what you can do to protect your family wealth.  For expert UK Tax advice and assistance, please contact us on 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.

UK Taxes. International, Cross Border, Ex-pat Taxes, Business, Personal, Capital Gains Tax

When faced with a large tax bill and the administrative burden of having to file Tax Returns in two jurisdictions, people always regret not getting professional taxation advice BEFORE they completed the transaction.  Over the past number of years I’ve been contacted by several Irish citizens returning home from the UK where they’ve lived and worked for a number of years.  In the majority of cases, these individuals have had difficulty selling their UK homes and, as a result, may have rented them out for a number of years until a suitable buyer was found.  The main question they asked was “Do I have an Irish and a UK Capital Gains Tax liability?”

Up until 5^th April 2015 the UK domestic law did not impose a Capital Gains Tax liability on non residents which meant if you were Irish resident, for example, then you had no exposure to UK CGT on the sale or disposal of a UK asset.  Because the UK domestic tax law didn’t and couldn’t impose a charge to UK CGT on the disposal of the asset by a non-resident then the Double Taxation Treaty didn’t need to be consulted but the individual would have a CGT liability in their place of residence.  Under Section 29(2) Taxes Consolidated Acts 1997, an Irish resident individual only paid Capital Gains Tax in Ireland.

From 5^th April 2015 the UK Government amended the taxation of gains made by non-residents disposing of UK residential property.

The New UK Rules

The new CGT charge on non-residents deals with “property used or suitable for use as a dwelling” and will include residential property used for letting purposes.

There are, of course, exclusions for certain types of property in communal use which include boarding schools, nursing homes and certain types of student accommodation.

What differentiates this new charge from the existing ATED-related CGT charge is that all residential property falling within the definition comes within the scope of this new legislation regardless of the value of the property.

The existing ATED-related CGT charge limited the charge to properties where the consideration on sale/disposal exceeded a specified “threshold amount” which for all gains arising on or after 6^th April 2015 is £1m.

So, who will be affected by this new charge?

The charge will apply to gains made by

• Individuals

• Trustees

• Closely held non-resident companies

• Funds – to the extent that these gains are not within the ATED-related CGT charge

Who will not be affected by this new charge?

Companies and funds which are not closely-held as well as the majority of institutional investors.

Tax rates (UK)

The tax rates for the new CGT charge on non-residents are the same for UK residents who pay CGT at their marginal rate of Income Tax.

What does that mean?

For taxpayers paying at a Basic Rate, the rate will be 18%

For taxpayers liable at the higher/additional rate, it will be 28%.

For non-residents, the rate will depend on their total UK Income and Gains.

Is there an Annual Exemption?

The annual exempt amount for gains of £11,000 is also be available to non-residents.

Paying and Filing (UK)

In circumstances where the non resident person has an “existing relationship” with HMRC and providing the disposal is not exempt, they will be required to file a self-assessment Tax Return following the end of the tax year and make the relevant payment within the usual deadline dates.

A person who does not have an “existing relationship” must submit a Tax Return and make the appropriate tax payment within thirty days.

What about Tax Returns requiring Amendments?

Amendments or changes to these Tax Returns are allowable within the twelve months following the normal filing date for the tax year in which the disposal is made.

In Summary

• For non-residents disposing of UK residential property, Capital Gains Tax was not an issue up until 6th April 2015.

• With the introduction of the new legislation, which takes from 6th April 2015, non resident individuals, trustees and/or closely held companies or funds may be exposed to a UK CGT Charge.

• Non-resident individuals, trustees or closely-held entities can avoid a CGT charge on a disposal of UK residential property where the property qualifies for Principal Private Residence Relief.

• The new legislation governing Principal Private Residence Relief has prevented some non-residents from claiming the CGT relief.

• Under this new rule, a residence will not qualify for PPR for a tax year unless (a) the person making the disposal is tax resident in the country where the property is located for that tax year or (b) the person spent at least 90 days in that property in that tax year.

• Non-residents can defer the payment of the CGT due until the self-assessment filing date provided they register with HMRC.

For further information, please click: https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-calculating-taxable-gain-or-loss

If you have returned from the UK and you are looking for accurate and up-to-date UK Tax advice or you are seeking UK Tax Consultants with specific HMRC experience, 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.