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UK tax changes for business sellers: the tracker

Last updated 8 October 2026

Tax rules for business sales have changed more since 2020 than in the decade before. The lifetime limit for what is now Business Asset Disposal Relief was cut, capital gains tax rates went up, Employee Ownership Trust relief was halved and inheritance tax relief on business assets was capped.

This page lists the changes that matter most when you sell, buy or restructure a business, with the date each one took effect. Every entry links to a government source. It is a summary of what changed, not advice on a particular deal, and the detailed conditions for each relief still apply.

Latest changes

  • 6 April 2026: BADR and Investors' Relief rise to 18%. This is the second step of the increase announced at the Autumn Budget 2024. Qualifying gains were taxed at 10% until 5 April 2025 and 14% in 2025/26.
  • 6 April 2026: a £2.5 million cap on 100% Business Relief and Agricultural Relief. Value above the cap gets 50% relief, and unused allowance can pass to a surviving spouse or civil partner.
  • 6 April 2026: dividend tax rates rise by 2 percentage points. The ordinary rate is now 10.75% and the upper rate 35.75%. The additional rate stays at 39.35%. This matters for pre-sale dividends and for owners who take profits as dividends.
  • 26 November 2025: Employee Ownership Trust relief halved. Sellers to an Employee Ownership Trust now pay capital gains tax on 50% of the gain.

2026

Date effectiveChangeWho it affectsWhat it means
6 April 2026Business Asset Disposal Relief and Investors' Relief rate rises from 14% to 18%Shareholders selling qualifying shares, sole traders and partners selling a businessThe gap between the relief rate and the 24% main rate narrows to 6 percentage points. The £1 million lifetime limit still saves up to £60,000 against the main rate.
6 April 2026100% Business Relief and Agricultural Relief limited to the first £2.5 million of combined qualifying property, with 50% relief above that. Unused allowance can be transferred to a surviving spouse or civil partner. Shares designated as not listed on a recognised stock exchange, such as AIM shares, get 50% relief.Owners of trading companies and farms, and trusts holding themOwners of larger businesses may face inheritance tax on part of the value of their shares. The interest-free option to pay the tax over 10 years now covers all property qualifying for these reliefs.
6 April 2026Dividend ordinary rate rises from 8.75% to 10.75% and upper rate from 33.75% to 35.75%Shareholders who receive dividends, including pre-sale dividendsExtracting profits as a dividend before a sale costs more. The additional rate is unchanged at 39.35%.
6 April 2026Enterprise Management Incentives limits increased: company options from £3 million to £6 million, gross assets from £30 million to £120 million, employees from 250 to 500Growing companies with share option schemes, and their buyersMore companies can grant EMI options. The maximum exercise period also rises from 10 to 15 years, and this can apply to existing options that have not expired or been exercised.
6 April 2026Incorporation relief now has to be claimedSole traders, partners and trustees transferring a business to a companyThe relief used to apply automatically. A claim is now needed, usually through the Self Assessment return, by the first anniversary of 31 January after the tax year of the transfer.

2025

Date effectiveChangeWho it affectsWhat it means
26 November 2025Capital gains tax relief on a sale to an Employee Ownership Trust cut from 100% to 50% of the gainOwners selling a controlling interest to an Employee Ownership TrustHalf of the gain is taxed at the time of sale. The other half is held over and comes into charge if the trustees later sell the shares. Business Asset Disposal Relief and Investors' Relief can't be claimed alongside it.
26 November 2025Anti-avoidance rule for share exchanges and company reconstructions revisedIndividuals, trusts and companies swapping shares or reorganising a companyWhere a main purpose of arrangements is to get a tax advantage, HMRC can make adjustments on a just and reasonable basis. It applies to shares or debentures issued on or after 26 November 2025.
6 April 2025Business Asset Disposal Relief and Investors' Relief rate rises from 10% to 14%Sellers claiming either reliefFirst step of the increase announced at the Autumn Budget 2024.
6 April 2025Inheritance tax moves from a domicile-based system to one based on long-term UK residenceInternationally mobile owners and buyers, and trusts they have set upWorldwide assets are within UK inheritance tax once you have been UK resident for 10 of the previous 20 tax years, and can stay in scope for a period after you leave.
6 April 2025Remittance basis abolished and replaced by a four-year foreign income and gains regimeUK residents who were not domiciled in the UK, and new arrivalsNew arrivals who have been non-resident for the previous 10 years can claim relief on foreign income and gains for their first four years. A temporary repatriation facility charges 12% in 2025/26 and 2026/27 and 15% in 2027/28.

2024

Date effectiveChangeWho it affectsWhat it means
30 October 2024Main capital gains tax rates rise from 10% and 20% to 18% and 24%Most individual sellers of shares and business assetsGains above the basic rate band are taxed at 24%. Rules apply to contracts signed before 30 October 2024 but completed later, to stop forestalling.
30 October 2024Investors' Relief lifetime limit cut from £10 million to £1 millionExternal investors in unlisted trading companiesThe lifetime limit now matches Business Asset Disposal Relief.
30 October 2024Employee Ownership Trust conditions tightenedOwners selling to an Employee Ownership TrustTrustees must be UK resident, former owners and connected persons can't control the trust, and the period in which relief can be clawed back from the seller runs to the end of the fourth tax year after the sale.
6 April 2024Capital gains tax annual exempt amount cut from £6,000 to £3,000All individuals with gainsThe tax-free allowance is now small compared with the gain on most business sales.
6 April 2024Deadline to notify HMRC of an EMI option grant moved from 92 days after the grant to 6 July after the end of the tax year of grantCompanies granting EMI optionsA late notification is less likely to cost employees their tax advantages, which helps when options are checked in due diligence.

2023

Date effectiveChangeWho it affectsWhat it means
6 April 2023Capital gains tax annual exempt amount cut from £12,300 to £6,000All individuals with gainsFirst of two cuts announced at the Autumn Statement 2022.
1 April 2023Corporation tax main rate rises from 19% to 25% for profits over £250,000, with a 19% small profits rate for profits of £50,000 or lessCompanies, including holding companies selling subsidiaries and companies buying businessesCompany gains that don't qualify for the Substantial Shareholding Exemption are taxed at up to 25%. Marginal relief applies between £50,000 and £250,000 of profits.

2020

Date effectiveChangeWho it affectsWhat it means
6 April 2020Entrepreneurs' Relief renamed Business Asset Disposal ReliefSellers of qualifying businesses and sharesA change of name only. The conditions stayed the same.
11 March 2020Entrepreneurs' Relief lifetime limit cut from £10 million to £1 millionSellers of qualifying businesses and sharesOnly the first £1 million of lifetime gains gets the lower rate. Gains above that are taxed at the main rates.

What's announced but not yet in force

Expected dateChangeWho it affectsWhat it means
6 April 2027Gift holdover relief on shares: assets qualifying for the Substantial Shareholding Exemption or within the intangible fixed assets regime will be included in the formula that restricts relief for non-trading assetsPeople giving shares in a trading company or holding company of a trading groupDraft legislation was published on 23 June 2026. The change aims to remove distortions in how much relief is available when a group holds non-trading assets.
6 April 2027Most unused pension funds and pension death benefits brought into the estate for inheritance taxAnyone planning to hold sale proceeds or wealth in a pensionPensions will no longer sit outside the estate in most cases, which affects estate planning after a sale.

The next Budget is on 28 October 2026. We will add any changes announced then.

Sources

  1. Capital Gains Tax: Entrepreneurs' Relief, reduction in the lifetime limit (11 March 2020): https://www.gov.uk/government/publications/change-to-the-entrepreneurs-relief-lifetime-limit-for-capital-gains-tax/capital-gains-tax-entrepreneurs-relief-reduction-in-the-lifetime-limit--2 (opens in a new tab)
  2. HMRC Capital Gains Manual CG63955, Business Asset Disposal Relief: broad outline: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg63955 (opens in a new tab)
  3. Corporation Tax charge and rates from 1 April 2022 and Small Profits Rate and Marginal Relief from 1 April 2023: https://www.gov.uk/government/publications/corporation-tax-charge-and-rates-from-1-april-2022-and-small-profits-rate-and-marginal-relief-from-1-april-2023/corporation-tax-charge-and-rates-from-1-april-2022-and-small-profits-rate-and-marginal-relief-from-1-april-2023 (opens in a new tab)
  4. Capital Gains Tax: Annual Exempt Amount (Autumn Statement 2022): https://www.gov.uk/government/publications/reducing-the-annual-exempt-amount-for-capital-gains-tax/capital-gains-tax-annual-exempt-amount (opens in a new tab)
  5. Enterprise Management Incentives: extending the time limit to submit a notification of a grant of options: https://www.gov.uk/government/publications/enterprise-management-incentives-extension-of-the-time-limit-to-submit-a-notification-of-a-grant-of-options/enterprise-management-incentives-extending-the-time-limit-to-submit-a-notification-of-a-grant-of-options (opens in a new tab)
  6. Capital Gains Tax: rates of tax (Autumn Budget 2024): https://www.gov.uk/government/publications/changes-to-the-rates-of-capital-gains-tax/capital-gains-tax-rates-of-tax (opens in a new tab)
  7. Capital Gains Tax: Investors' Relief, reduction in the lifetime limit: https://www.gov.uk/government/publications/capital-gains-tax-investors-relief-lifetime-limit-reduction/capital-gains-tax-investors-relief-reduction-in-the-lifetime-limit (opens in a new tab)
  8. Taxation of Employee Ownership Trusts and Employee Benefit Trusts (Autumn Budget 2024): https://www.gov.uk/government/publications/changes-to-the-taxation-of-employee-ownership-trusts-and-employee-benefit-trusts/taxation-of-employee-ownership-trusts-and-employee-benefit-trusts (opens in a new tab)
  9. Reforming the taxation of non-UK domiciled individuals (30 October 2024): https://www.gov.uk/government/publications/tax-changes-for-non-uk-domiciled-individuals/reforming-the-taxation-of-non-uk-domiciled-individuals (opens in a new tab)
  10. Capital Gains Tax: Employee Ownership Trusts relief reduction (Budget 2025): https://www.gov.uk/government/publications/capital-gains-tax-employee-ownership-trusts/capital-gains-tax-employee-ownership-trusts-relief-reduction (opens in a new tab)
  11. Capital Gains Tax: anti-avoidance for share exchanges and reorganisations (Budget 2025): https://www.gov.uk/government/publications/capital-gains-tax-share-exchanges-and-reorganisations/capital-gains-tax-anti-avoidance-for-share-exchanges-and-reorganisations (opens in a new tab)
  12. Agricultural property relief and business property relief changes: https://www.gov.uk/government/publications/changes-to-agricultural-property-relief-and-business-property-relief/agricultural-property-relief-and-business-property-relief-changes (opens in a new tab)
  13. Inheritance tax reliefs threshold to rise to £2.5m for farmers and businesses (23 December 2025): https://www.gov.uk/government/news/inheritance-tax-reliefs-threshold-to-rise-to-25m-for-farmers-and-businesses (opens in a new tab)
  14. Income Tax: changes to tax rates for property, savings and dividend income (Budget 2025): https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income (opens in a new tab)
  15. Expanding the eligibility limits of the Enterprise Management Incentive scheme: https://www.gov.uk/government/publications/enterprise-management-incentive-scheme-increasing-the-limits/expanding-the-eligibility-limits-of-the-enterprise-management-incentive-scheme (opens in a new tab)
  16. Capital Gains Tax: Incorporation Relief claims process: https://www.gov.uk/government/publications/capital-gains-tax-incorporation-relief-claims/capital-gains-tax-incorporation-relief-claims-process (opens in a new tab)
  17. Budget 2025: overview of tax legislation and rates: https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar (opens in a new tab)
  18. Capital Gains Tax relief for gifts of business assets (23 June 2026): https://www.gov.uk/government/publications/capital-gains-tax-relief-on-gifts-of-business-assets/capital-gains-tax-relief-for-gifts-of-business-assets (opens in a new tab)
  19. Inheritance Tax: unused pension funds and death benefits: https://www.gov.uk/government/publications/inheritance-tax-unused-pension-funds-and-death-benefits/inheritance-tax-unused-pension-funds-and-death-benefits (opens in a new tab)
  20. Chancellor's letter to the Treasury Select Committee on the Budget 2026 date: https://www.gov.uk/government/publications/chancellor-letter-to-the-treasury-select-committee-tsc-budget-2026-date (opens in a new tab)

We update this tracker after every Budget and fiscal event.

FAQs

Frequently asked questions

What is the Business Asset Disposal Relief rate now?

For disposals on or after 6 April 2026, qualifying gains are taxed at 18%. The rate was 10% until 5 April 2025 and 14% for disposals between 6 April 2025 and 5 April 2026. The lifetime limit has been £1 million since 11 March 2020.

When did the capital gains tax rates on shares go up?

The main rates rose from 10% and 20% to 18% and 24% for disposals made on or after 30 October 2024, the date of the Autumn Budget 2024. Special rules apply to contracts signed before that date but completed later.

Is a sale to an Employee Ownership Trust still free of capital gains tax?

Not fully. For disposals on or after 26 November 2025, the relief covers 50% of the gain, and the other 50% is taxable when you sell. Business Asset Disposal Relief and Investors' Relief cannot be claimed on a disposal where the Employee Ownership Trust relief is claimed.

How much Business Relief is available for inheritance tax from April 2026?

From 6 April 2026, 100% relief applies to the first £2.5 million of combined qualifying business and agricultural property, with 50% relief above that. Any unused part of the allowance can pass to a surviving spouse or civil partner.

Was the Business Relief allowance £1 million or £2.5 million?

The Autumn Budget 2024 announced a £1 million allowance. On 23 December 2025 the government said the threshold would be £2.5 million instead, and that is the figure that applies from 6 April 2026.

What happened to the annual exempt amount for capital gains tax?

It was cut from £12,300 to £6,000 for 2023/24 and to £3,000 from 2024/25. On a business sale the saving is small, but each spouse or civil partner has their own allowance.

Did the Investors' Relief lifetime limit change?

Yes. It fell from £10 million to £1 million for disposals on or after 30 October 2024. Investors' Relief also follows the Business Asset Disposal Relief rate, so it is 18% from 6 April 2026.

How did the non-dom changes affect business owners?

From 6 April 2025 the remittance basis was abolished and replaced by a four-year relief for foreign income and gains for new arrivals. Inheritance tax now depends on long-term UK residence, broadly 10 of the previous 20 tax years, rather than domicile.

Do I now have to claim incorporation relief?

Yes, for transfers of a business to a company on or after 6 April 2026. Before that date the relief applied automatically if the conditions were met. The claim is usually made through the Self Assessment return.

When will this tracker next change?

The next Budget is on 28 October 2026. We review the tracker after every Budget and fiscal event, and when announced changes come into force.

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