The rules around Capital Gains Tax (CGT) and Inheritance Tax (IHT) are set to change – and for business owners, timing really matters.
Whether you’re planning to sell a business, restructure your assets, or think about succession planning, the new tax year is a good time to revisit your plans.
Here’s a clear breakdown of what’s changing – and what small business owners should be thinking about now.
📈 Capital Gains Tax (CGT): Rate Changes on the Horizon
If you’re planning to sell capital assets in the 2025/26 tax year, here’s how CGT will apply:
Business Asset Disposal Relief (BADR)
If you’re eligible for Business Asset Disposal Relief, the rate is currently 10%, but that’s changing:
-
From April 2025, BADR will increase to 14%
-
From 6 April 2026, it will rise again to 18%
⏳ Timing matters. If you’re considering selling your business or other qualifying assets, it’s crucial to review your plans before the higher rates take effect. There may be opportunities to reduce your tax bill – but only if you act early.
🌾 IHT Reliefs for Business Owners and Farmers: Major Changes from 2026
If your estate includes agricultural or business property, the current rules allow for up to 100% relief on qualifying assets. But from 6 April 2026, the government is planning some big changes.
Here’s what’s proposed:
-
The 100% IHT relief will only apply to the first £1 million of qualifying assets
-
Any value above £1 million will only receive 50% relief
-
Business Relief on AIM shares and similar investments will also drop from 100% to 50%
⚠️ What this means for you:
If your estate includes valuable business or agricultural property, or if you’re using trusts as part of your estate plan, this could significantly impact your IHT exposure.
📅 Why Planning Early is Key
The details of these changes aren’t yet final – but waiting until the last minute could limit your options.
Even gifting assets before 6 April 2026 may not guarantee full relief, so it’s essential to review your estate and tax planning now.