If you are thinking about selling your business, property or other investments, keeping an eye on how Capital Gains Tax (CGT) is changing could save you a lot of money, or at least some unwelcome surprises.
CGT receipts have seen some big swings over the past few years. After hitting a high of £16.9 billion in 2022/23, they dropped by nearly a quarter to £13.1 billion just two years later.
However, this decline is unlikely to last. In fact, receipts could soon climb higher than ever.
Why the drop in receipts?
It is tempting to believe that CGT receipts have fallen because people are leaving the UK or moving their money abroad, but the reality is a little simpler.
The CGT system works with a natural time lag. Gains from asset sales are usually not taxed straight away, sometimes not until months later.
Recent receipts largely reflect disposals that happened back when markets were less active, and many people were holding off from selling during uncertain times.
Why the bounce back is coming
That picture is changing fast. The Office for Budget Responsibility expects CGT receipts to shoot back up this year, potentially reaching £19.7 billion, a 50 per cent rise on last year.
So, why is this?
For starters, the property market is more buoyant. Investors are returning to the markets, and fears about changes to CGT rates have already encouraged many business owners to accelerate plans and sell sooner than they originally intended.
On top of that, the increase to Stamp Duty Land Tax in April 2025 pushed many to bring forward property transactions, triggering additional CGT liabilities.
Looking further ahead, there is also the confirmed rise in the rate of CGT under Business Asset Disposal Relief (BADR), increasing to 18 per cent from April 2026 (up from 10 per cent prior to April 2025, and currently 14 per cent).
This will affect many business owners looking to retire or exit, and is expected to bring in more tax for the Government in years to come.
Timing your next disposal – what to think about
If you are planning to sell, here are some things to bear in mind:
- If rates do rise again, delaying a sale could mean paying a larger tax bill
- Disposals before April 2026 could still benefit from lower BADR rates
- The timing of when you complete a sale, and when you report the gain, can make a real difference to how much tax you owe
If you are selling a business or significant asset, planning ahead can help you structure the deal to reduce your tax exposure.
The next Budget may bring more changes
With speculation about CGT rising ahead of the next Autumn Budget, many are choosing to act now rather than risk a sudden hike later.
If you are considering a sale in the next twelve to eighteen months, it is well worth taking professional advice.
Acting early could help you lock in current rates and avoid being caught out.
If you would like to talk through your plans, we would be happy to help. Contact us today for a chat with our team.