Capital Gains Tax (Table F)
Annual exempt amount
For 2027/28, this remains frozen at £3,000 for individuals and deceased’s estates, while for most trusts the figure remains £1,500.
There are no changes to the main rates of CGT.
Business asset disposal relief (BADR)
The tax rate for qualifying gains remains 18%, but the lifetime limit for such gains is cut from £1 million to £500,000 for disposals from 6 April 2027. For a higher or top rate income taxpayer with £1 million of qualifying gains, this will increase their CGT payable by £30,000.
There will be special rules for contracts and for certain share reorganisations entered into before 6 April 2027 that have not been completed by that date.
Founders’ relief
The Chancellor announced that this new relief ‘will support founders and early investors who have made a significant long-term contribution to the creation and development of the UK’s most high-growth and innovative companies’. He said it will provide a lower rate of CGT of 10% for qualifying disposals of shares or securities on or after 6 April 2027, subject to a lifetime limit on qualifying gains of £10 million. The details will only be confirmed after further consultation.
Reform of company distributions
During the summer, HMRC published a consultation document entitled ‘Modernising the taxation of distributions and repayment of capital from companies’. It contained a number of controversial proposals to change the way in which capital reductions by companies are taxed, with a view to bringing such transactions within the charge to income tax rather than CGT. There would also be changes to the way that demergers and share buy-backs are treated.
Although there will no doubt be further consultation in this area, the Government has stated that it intends make any new legislation effective from April 2028. This may lead to a surge in transactions before then to take advantage of the current rules, unless anti-forestalling rules are introduced.