Tax around selling assets, passing on wealth and succession planning is becoming less generous and more complex. For business owners, landlords and families, the decisions you make over the next few years could have a lasting tax impact.
At A&C Chartered Accountants, we are increasingly helping clients plan earlier and more deliberately, rather than reacting once a transaction is already underway.
Capital Gains Tax and the importance of timing
For most capital disposals in 2026/27, Capital Gains Tax will apply at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers.
From 6 April 2026, the Capital Gains Tax rate for Business Asset Disposal Relief increases from 14% to 18%. For anyone considering selling a business or qualifying assets, timing is now a critical planning decision rather than an afterthought.
Employee Ownership Trusts now offer less certainty
Following the November Budget, Capital Gains Tax relief on disposals into an Employee Ownership Trust has been reduced from 100% to 50% with immediate effect.
Half of the gain is now chargeable straight away. That chargeable element does not qualify for Business Asset Disposal Relief or Investors’ Relief. The remaining 50% is held over and may become taxable on a future disposal by the trustees.
Employee Ownership Trusts may still be appropriate, but the tax outcome is no longer as straightforward as it once was.
Incorporation relief becomes claim-based
From 6 April 2026, incorporation relief will no longer apply automatically when a business is transferred into a company.
A formal claim will need to be made through the self assessment tax return, supported by transaction details, tax computations and confirmation of the type of business transferred. This increases both administrative burden and the risk of errors if the process is not handled properly.
Inheritance Tax thresholds remain frozen
Inheritance Tax continues to apply at up to 40% after available allowances. The nil rate band remains at £325,000 and the residence nil rate band at £175,000, both frozen until 2031.
The residence nil rate band continues to be withdrawn once an estate exceeds £2 million. Where no taper applies, a married couple may still pass on up to £1 million free of Inheritance Tax.
Changes for business owners and farmers
From 6 April 2026, reforms to Agricultural Property Relief and Business Property Relief will significantly change how business and agricultural assets are treated.
Relief at 100% will be capped at £1 million of combined qualifying assets, with relief above that reduced to 50%. Relief on AIM shares will also fall from 100% to 50%.
Unused relief allowances will become transferable between spouses, potentially allowing up to £3 million to pass free of Inheritance Tax where business or agricultural assets are involved. However, transitional rules mean early action still needs careful planning.
Pensions brought into the Inheritance Tax net
From April 2027, unused pension funds will be included in an individual’s estate for Inheritance Tax purposes, regardless of any trust arrangements.
This represents a clear shift away from pensions being used primarily as a long-term estate planning tool.
Planning ahead
Disposals, succession and estate planning now require earlier conversations and a joined-up view of income tax, Capital Gains Tax and Inheritance Tax.