Capital gains tax (incl. business reliefs)

BLP.14 — Capital Gains Tax (incl. business reliefs)

What CGT charges. Tax on the chargeable gain arising on the disposal of a chargeable asset by a chargeable person (TCGA 1992). Disposal includes sale and gift (gifts are at market value — connected persons, s.18, also use market value). Death is not a disposal: assets are uplifted to probate value, so latent gains are wiped out (s.62).

Computing the gain.

• Proceeds (or market value) − allowable costs (acquisition cost, incidental costs of acquisition/disposal, enhancement expenditure) = gain.
• Deduct any reliefs, then the annual exempt amount £3,000.
• Apply the rate.

Rates (2026/27). Standard CGT: 18% (gains within the basic-rate band) / 24% (above). These have applied since 30 Oct 2024. Add CGT to the top of income to find which band the gain falls in.

Business Asset Disposal Relief (BADR).

• Reduces the rate to 18% for qualifying disposals on/after 6 April 2026.
• £1,000,000 LIFETIME limit (not per-disposal, not annual).
• Qualifying: disposal of a trading business / partnership interest / shares in the taxpayer's personal company (≥5% ordinary shares + voting rights, officer/employee), held throughout 2 years to disposal.

Other CGT reliefs to know.

• Rollover relief (s.152): defer gain on qualifying business assets reinvested in new qualifying assets.
• Holdover/gift relief (s.165): defer gain on gift of business assets — done's base cost is reduced.
• Spouse transfers: no gain/no loss (s.58).
• Private residence relief (s.222): main home exempt.

Common traps.

• BADR is the £1m lifetime limit and the rate is now 18% — do not state the old 10% / £10m figures.
• Don't confuse BADR (CGT, £1m) with IHT Business Property Relief (now capped at a £2.5m 100% allowance from 6 April 2026, transferable between spouses).
• AEA is only £3,000 — easy to overstate.
• Death = uplift, no CGT; a lifetime gift is a disposal at market value.
• Check which slice of income the gain sits on before choosing 18% vs 24%.