Following recent consultations and political signals, there’s growing expectation that the Autumn 2025 Budget will include increases to Capital Gains Tax (CGT). The potential rise adds urgency for business owners, particularly those considering asset disposals or restructuring. Here’s what UK businesses need to know to respond effectively.
Why CGT May Rise in Autumn 2025
With fiscal pressures high, successive governments have looked to CGT as a more politically palatable tax. Capital gains from business assets, property sales, and share disposals are under scrutiny. Watch political announcements in late summer for signals ahead of Budget day.
Potential Scope of CGT Increases
- Rate Hikes: Business Asset Disposal Relief (formerly Entrepreneurs’ Relief), currently at 10%, could climb to 14–18%—mirroring earlier plans.
- Threshold Adjustments: The £1 million lifetime limit for relief might be lowered.
- Broader Tax Base: Entrepreneurs’ Relief could be restricted to smaller businesses or phased out entirely.
Impact on Businesses
- Asset Disposal Planning: Those planning to sell assets or shares must consider advancing them to before October 2025.
- Acquisition & Succession: Business restructuring, mergers, or generational handovers could incur higher tax costs.
- Cash Flow & Retirement Planning: Individuals factoring CGT into retirement must revisit pension and wealth strategies.
- Investor Implications: Private equity, startups, and property investors should prepare for reduced after-tax ROI.
How to Prepare Now
- Model the Impact: Run cash flow forecasts both with and without the CGT rise.
- Consider Accelerated Exits: If planning a sale, restructuring, or asset disposal, discuss timing with your accountant.
- Explore Relief Kits: Look into deferral vehicles like SEIS/EIS or other reliefs that may help mitigate the impact.
- Reassess Capital Structure: Asset-heavy or shareholder-rich models could be redesigned to reduce CGT exposure.
Opportunities to Explore
- Rollover Relief: Reinvesting gains quickly into qualifying assets may defer liabilities.
- Partial Disposals: Spreading disposals over multiple tax years could keep rates lower.
- Inheritance Tax Planning: If business assets will be inherited, aligning CGT events with lifetime transfers might create efficiencies.
Conclusion
While CGT increases are not confirmed, preparing now gives businesses an edge. Strategic planning before the Autumn Budget can protect finances and unlock opportunities—versus reactive damage limitation after the fact.