Capital gains tax doesn’t grab headlines the way income tax does, but for business owners who are selling assets, winding down a company, or disposing of investment property, it can be the single biggest tax bill they ever face. And in 2026, it’s a topic that deserves more attention than most people are giving it.

The April 2026 changes — covering both the main CGT rates and Business Asset Disposal Relief — represent the most significant shift to the regime in several years. Some of what’s changed is straightforward. Some of it is genuinely nuanced. Either way, our view is that too many business owners are still operating on assumptions that are no longer accurate.

This post sets out what’s actually changed, who it affects, and how we think about planning around it. If you’re approaching a business sale, a property disposal, or simply want to understand where you stand, this should give you a clearer picture.

Before getting into the changes, it’s worth grounding the basics — because capital gains tax catches a wider range of transactions than many business owners expect.

CGT applies when you dispose of an asset at a profit. That includes selling a business or shares in one, disposing of a second property or investment property, selling shares held outside an ISA, and transferring assets to another person in some circumstances. It does not apply to assets you sell at a loss, your main residential home (in most cases), and assets held inside an ISA or pension.

The gain is calculated as the difference between what you received and what you originally paid — adjusted for allowable costs such as improvement expenditure and transaction fees. You then apply the relevant rate to whatever gain falls within your remaining basic-rate band, and a higher rate to anything above it.

One thing that often catches people out: the Annual Exempt Amount — the threshold below which no CGT is due — has been cut significantly in recent years. For the 2025/26 tax year it stood at £3,000, a long way from the £12,300 it was just a few years ago. That means more gains are now taxable, full stop.

If you want a more detailed breakdown of how the tax works from the ground up, our what is capital gains tax article covers the fundamentals.

From 6 April 2026, the main capital gains tax rates for individuals increased. The basic-rate band rate on most assets moved from 18% to 18% — actually unchanged on assets other than residential property — but the higher-rate charge on investment assets rose to 24%, aligning with the residential property rate that was already at that level.

For companies, the changes took effect from 1 April 2026, with amendments to how certain gains are characterised, particularly for those holding interests in property-rich entities. From 26 November 2025, the definition of a property-rich entity was amended, which has implications for non-resident investors and certain corporate structures holding significant property assets.

There’s also a broader policy context worth acknowledging. HMRC’s own figures have suggested that simply raising CGT rates doesn’t automatically raise more revenue — because it changes behaviour. Sellers defer disposals, restructure transactions, or hold assets for longer. That’s not an argument for ignoring the rules; it’s a reason to plan intelligently within them.

The practical takeaway: if you were planning a disposal and assumed CGT would cost you the same as it did two or three years ago, you need to revisit those numbers. The direction of travel has been upward, and the gap between a well-planned exit and an unplanned one has widened considerably.

Business Asset Disposal Relief — previously known as Entrepreneurs’ Relief — is the main mechanism for reducing CGT on qualifying business disposals. It applies a reduced rate rather than the standard higher rate, and it remains one of the most valuable reliefs available to business owners. But it has changed, and the window to benefit at the lower rate has now closed.

For disposals made between 6 April 2025 and 5 April 2026, the BADR rate was 14%. From 6 April 2026, that rate increased to 18%. The lifetime allowance remains at £1 million of qualifying gains.

To qualify when selling a business outright, you must have been a sole trader or partner for at least two years, and have owned the business for at least two years. For shares in a company, you need to have been an employee or office holder for at least two years, with the company’s main activities being trading. For non-EMI shares, you also need to have held at least 5% of shares and voting rights for a minimum of two years.

Those qualifying conditions matter more than people realise. We regularly see clients who assumed they’d qualify, only to find a two-year clock hadn’t started running when they thought it had — sometimes because of a company restructure, sometimes because of how shares were originally issued. If a business sale is on your horizon, it’s worth checking your eligibility well in advance rather than the month before you complete.

One thing we want to be direct about: capital gains tax errors are treated seriously by HMRC, and the penalties can be severe.

If your return contains an inaccuracy that results in tax being unpaid, understated, or under-assessed, a penalty can apply. For innocent errors — where you took reasonable care — the penalty may be nil or modest. But for careless errors, penalties start at 15% of the tax owed. For deliberate inaccuracies, penalties can reach 70% of the extra tax due. For deliberate and concealed errors, that rises to 100%.

This isn’t just a concern for large disposals. HMRC has the ability to open enquiries into CGT returns for any size of transaction, and with the volume of data now available through property transactions, share sale reporting, and bank data sharing, the likelihood of a mismatch being spotted has increased.

For residential property disposals specifically, there’s also a 60-day reporting deadline — UK residents who dispose of UK residential property must report and pay any CGT due within 60 days of completion. Missing that deadline attracts an automatic penalty, regardless of whether you eventually pay the correct amount.

The message here isn’t to frighten anyone — it’s that capital gains tax isn’t a self-serve area of the tax system where guessing is a reasonable approach. Getting the numbers right, and reporting on time, genuinely matters.

Even with rates rising and reliefs narrowing, there are still legitimate and effective ways to manage capital gains tax with good planning. The key word is planning — most of the levers available require action before a disposal, not after.

A few approaches we discuss with clients regularly:

• Timing disposals across tax years. If you have a gain that can be crystallised in stages, spreading it across two tax years can use more of each year’s Annual Exempt Amount and keep more of the gain within the basic-rate band.
• Spousal transfers. Assets can be transferred between spouses or civil partners with no immediate CGT charge, which can allow a lower-rate taxpayer to use their own allowances and rate band on the eventual disposal.
• Checking BADR eligibility early. If you’re building toward an exit, make sure the qualifying conditions are being met now — not once a buyer appears.
• Loss harvesting. Capital losses can be offset against gains in the same tax year or carried forward indefinitely. If you hold assets sitting at a loss, it may make sense to realise those losses strategically.

None of this is complicated in principle, but each situation is different, and the interaction between CGT, income tax, and other taxes means that a decision that looks optimal in isolation can create issues elsewhere. That’s where having someone look at your overall picture — rather than just one transaction — genuinely adds value.