By Christopher Taylor, Senior Accountant at MM Business and Tax Consultancy

Capital Gains Tax Reforms 2026: Higher Rates on Business Disposals and What They Mean for Entrepreneurs

The 2026 tax year brings notable adjustments to Capital Gains Tax (CGT), particularly for those benefiting from reliefs on business sales. With the rate for Business Asset Disposal Relief (BADR, formerly Entrepreneurs’ Relief) rising to 18% from 6 April 2026, business owners face important planning decisions. As Senior Accountant at MM Business and Tax Consultancy, I’ve been advising clients on navigating these changes to protect wealth built over years of hard work.

This follows previous increases and aligns with broader fiscal policy. Standard CGT rates remain elevated following 2024/25 adjustments, but the specific uplift on reliefs impacts exit strategies significantly.

Understanding the BADR and Investors’ Relief Changes

BADR allows qualifying business owners to pay a reduced CGT rate on gains up to a £1 million lifetime limit. Previously at 10%, then 14%, the rate now moves to 18% for disposals on or after 6 April 2026. Investors’ Relief follows a similar trajectory. This reduces the tax advantage but still offers savings compared to standard rates.

Christopher Taylor of MM Business and Tax Consultancy explains: “For a £1 million gain, the tax liability rises from £140,000 at 14% to £180,000 at 18%. Timing disposals before the deadline or exploring alternative reliefs is critical for many.”

Additional considerations include interactions with Inheritance Tax reforms, such as restrictions on Agricultural and Business Property Reliefs, which compound planning complexity for family businesses.

Broader CGT Landscape and Carried Interest

Carried interest rules also evolve, with treatment shifting towards income tax from 2026 in many cases, following transitional CGT provisions. This affects private equity and investment professionals.

At MM Business and Tax Consultancy, we conduct scenario modelling for clients considering sales, retirements, or share transfers. Factors like the annual exempt amount, loss relief, and reinvestment options (such as Business Asset Rollover Relief) play key roles.

Actionable Strategies for Business Owners

Proactive steps include:

  • Reviewing eligibility for BADR and accelerating qualifying disposals where feasible.
  • Exploring incorporation or restructuring, though new rules from April 2026 may limit automatic incorporation relief in some cases.
  • Utilising trusts or pension contributions for tax-efficient wealth transfer.
  • Monitoring interactions with dividend and income tax changes.

Christopher Taylor comments: “At MM Business and Tax Consultancy, we stress holistic planning. A business sale is not just a tax event but a life milestone. Our advice integrates CGT with succession, retirement, and investment strategies.”

Clients in sectors like technology, professional services, and manufacturing have benefited from early reviews, identifying opportunities to crystallise gains or defer liabilities legitimately.

HMRC scrutiny on relief claims remains high, so robust documentation is essential. Our team at MM Business and Tax Consultancy ensures all claims are fully supported.

Looking Forward

These CGT reforms underscore the government’s focus on balancing revenue needs with business support. While challenges exist, opportunities for efficient planning persist. Christopher Taylor and the specialists at MM Business and Tax Consultancy in Canary Wharf continue to provide expert guidance, helping clients achieve successful outcomes amid evolving UK tax rules.

Business owners should act promptly. Contact MM Business and Tax Consultancy for a CGT health check tailored to your circumstances.