Capital Gains Tax in the UK: What’s Changing by 2026?

The UK government is implementing a series of Capital Gains Tax (CGT) reforms aimed at increasing revenue while maintaining international competitiveness. These changes, announced in the 2024 Autumn Budget, will affect individuals, trustees, and business owners. The reforms are being phased in, with the most significant adjustments taking full effect by 6 April 2026.

Key Changes to CGT Rates

1. General Asset Disposals

From 30 October 2024, the CGT rates on general (non-residential) assets will increase:

• Basic rate taxpayers: from 10% to 18%
• Higher and additional rate taxpayers: from 20% to 24%

These changes apply to most personal asset disposals, such as shares, valuable possessions, and business interests

2. Trustees and Personal Representatives

For disposals made on or after 30 October 2024, the CGT rate for trustees and personal representatives will rise from 20% to 24%

3. Business Asset Disposal Relief (BADR) and Investors’ Relief

These reliefs, which previously allowed qualifying gains to be taxed at a reduced rate of 10%, are being restructured:

• From 6 April 2025: the rate increases to 14%
• From 6 April 2026: the rate increases again to 18%

This change significantly reduces the tax advantage for entrepreneurs and long-term investors

4. Carried Interest

From 6 April 2026, carried interest (a share of investment profits typically received by fund managers) will be taxed under income tax rules, rather than CGT. A 72.5% multiplier will be applied to reflect the shift from capital to income treatment

What’s Not Changing?

• Residential property CGT rates remain at 18% (basic rate) and 24% (higher rate).
• The annual CGT exemption (currently £3,000 for individuals) has not been adjusted in this round of reforms.

Why These Changes Matter

These reforms are expected to:

• Increase tax revenues from wealthier individuals and investors.
• Narrow the gap between income tax and CGT rates, reducing incentives for tax planning through capital gains.

Planning Ahead

Taxpayers should consider:

• Reviewing investment portfolios to assess the impact of higher CGT rates.
• Timing disposals before rate increases take effect.
• Seeking professional advice on business exits or succession planning.