There is a row on this morning about whether Capital Gains Tax should go up again. If you own a business you might one day sell, the row is the least useful part of the story. The rise already happened. It finished on 6 April this year, and outside the deal world almost nobody noticed.
One correction before anything else, because the number is doing the rounds. The article reports record Capital Gains Tax in 2024-25 “reaching £127bn”. That is the gains figure, not the tax. HMRC published the real numbers yesterday morning: 584,000 people declared £127 billion of gains and paid £24.2 billion of Capital Gains Tax. The gap between those two is roughly what the entire argument is about, so it is worth being straight about which is which.
And the genuinely interesting thing in yesterday's release is not a claim about what a future rise might do. It is hard evidence of what the last one already did.
What HMRC published yesterday
Business Asset Disposal Relief is the bit of the tax system that matters to an owner-manager. It was called Entrepreneurs' Relief until 2020. It caps the Capital Gains Tax rate on the first £1 million of qualifying gains you make across your lifetime when you sell a trading business you have worked in. At Autumn Budget 2024 the Chancellor set that rate to rise twice: from 10% to 14% on 6 April 2025, and again to 18% on 6 April 2026.
Here is what claimants did about it, from HMRC's Table 4, published 27 August 2026.
| Tax year | People claiming | Qualifying gains | Tax charged |
|---|---|---|---|
| 2021-22 | 48,000 | £12.7bn | £1.22bn |
| 2022-23 | 45,000 | £12.6bn | £1.21bn |
| 2023-24 | 42,000 | £11.1bn | £1.08bn |
| 2024-25 | 61,000 | £18.5bn | £1.82bn |
Three years of gentle decline — 48,000, then 45,000, then 42,000 — and then 61,000. Claimants up 45%, gains up 67%, tax up 69%, all in the last year the 10% rate existed.
HMRC does not leave the explanation to anyone else. Its own commentary says the increases “were announced prior to implementation giving taxpayers an opportunity to bring forward disposals to benefit from the lower 10% rate”. That is the behavioural argument in the news story, except it is not modelled. It has been measured, by the tax authority, using the returns people actually filed.
What the change costs on the money
The lifetime limit is £1 million of gains, so the cleanest way to see the change is to run that same £1 million through all three rates. Illustrative, on GOV.UK's published rates.
| Date of disposal | Relief rate | Tax on £1m of qualifying gain |
|---|---|---|
| On or before 5 April 2025 | 10% | £100,000 |
| 6 April 2025 to 5 April 2026 | 14% | £140,000 |
| From 6 April 2026 | 18% | £180,000 |
Same business, same buyer, same price. £80,000 difference, decided entirely by the date on the completion statement.
Now a whole deal rather than the allowance. Take a founder selling their trading company with a £1.5 million gain, one shareholder, higher-rate taxpayer, completing in 2026-27. The first £1 million takes the relief at 18%. The balance takes the main rate of 24%, after the £3,000 annual exempt amount.
| £1.5m gain, one shareholder | 2026-27 (18% relief) | Pre-6 Apr 2025 (10% relief) |
|---|---|---|
| First £1,000,000 at the relief rate | £180,000 | £100,000 |
| Balance £500,000 less £3,000 allowance, at 24% | £119,280 | £119,280 |
| Capital Gains Tax due | £299,280 | £219,280 |
An effective rate of 19.95% across the whole gain, against 14.62% for the identical deal eighteen months earlier. The owner is £80,000 worse off and did nothing differently.
Who holds the shares is worth £30,360
Because the £1 million limit belongs to the person and not to the company, the same deal changes shape if two people qualify rather than one. Split that £1.5 million gain equally between two shareholders who each meet the tests, and each one has a £750,000 gain that fits inside their own lifetime allowance.
| Same £1.5m gain, 2026-27 | One shareholder | Two 50/50 shareholders |
|---|---|---|
| Gain taxed at 18% | £1,000,000 | £1,494,000 |
| Gain taxed at 24% | £497,000 | £0 |
| Effective rate on the whole gain | 19.95% | 17.93% |
| Capital Gains Tax due | £299,280 | £268,920 |
£30,360, on who was on the share register. And here is the part that catches people: you cannot arrange this in the month before completion. GOV.UK's conditions require the shareholding, the voting rights and the employment or office to have been in place for at least two years before the sale. A spouse or co-founder added to the register today does not qualify until 2028. Every decision about share structure is a decision about a deal two years out.
This is not a story about the very rich
Sixty-one thousand people sounds like a rounding error against 584,000 Capital Gains Tax payers, and the relief accounted for about 8% of all Capital Gains Tax collected in the year. HMRC also notes the concentration: 69% of the gains and 70% of the tax at the relief rate came from the quarter of claimants with qualifying gains of £500,000 or more.
Read that the other way round. Three-quarters of claimants — about 46,000 people — had qualifying gains under £500,000, and 38,000 of them under £250,000. The single biggest group in HMRC's table is the 11,000 people with gains between £100,000 and £250,000, sharing £1,866 million, an average of about £169,600 each. That is not a private equity exit. That is a plumbing firm, a two-van haulier, a dental practice, a consultancy with nine staff.
On £169,600 the relief rate change is the difference between £16,960 and £30,528. Call it £13,568 off the retirement of somebody who has run a small company for twenty years. That is the number the political argument keeps skipping past.
Three things worth doing this week
1. Check you actually qualify, on all four tests at once. GOV.UK's conditions for selling shares are that for at least two years you have been an employee or office holder, the company's main activities are trading, and you hold at least 5% of the shares and 5% of the voting rights and an entitlement to 5% of distributable profits or sale proceeds. Owners are usually confident about the first two and have never checked the third. A share class with no votes, or an alphabet share issued for dividend flexibility, can fail it outright.
2. Work out how much of the £1 million you have already used. It is a lifetime limit, not a per-sale one, and it was cut from £10 million to £1 million in 2020-21. A sale in 2018 may have consumed the allowance you are counting on. Anything above the limit is taxed at 24%, not 18%, so the answer changes the net proceeds materially.
3. Fix the share register now if it needs fixing. Not because a Budget is coming — because the two-year clock only runs forwards. Our capital gains calculator will give you the arithmetic on your own numbers, and the structural question is tax planning work rather than a form to fill in.
What is still uncertain, and when we will know
Three honest unknowns. First, the 2025-26 figures — the first year at 14% — are not published yet. They arrive in HMRC's next annual release, due around August 2027, and they are the real test of whether the surge was people moving disposals forward or a genuine increase in sales. On the evidence of the four years above, expect a fall.
Second, the claim at the centre of today's story. The Conservative analysis holds that Treasury modelling assumes taxable gains fall 3.6% for every 1% rise in the tax burden on investors, putting the revenue-maximising rate at around 22%. Mel Stride's line is that “HMRC's own estimates show increasing capital gains tax would lose the Treasury money”. Simon French of Panmure Liberum told City A.M. the latest data “pours cold water on the idea that there is a pot of recurring tax revenue to go for here”. No Treasury or HMRC response appears in the piece, and we have not seen the underlying modelling, so treat the 3.6% as a party's reading of a document rather than a published figure.
Third, whether the Budget touches Capital Gains Tax again. Nothing has been announced. The rates that hold today are 18% and 24% on the main gains, 18% on relief-qualifying gains from 6 April 2026, and a £3,000 annual exempt amount. We will update this page when the Budget lands.
The practical point sits underneath all of it. The tax on selling up has risen 80% in two years, by announcement rather than by surprise, and the people it lands hardest on are the ones with no adviser telling them their voting rights fail a test they have never read. If an exit is anywhere in the next five years, the work belongs in the business planning conversation now, not in the data room later. That is what our advisory and limited company work is for, and it is a good deal cheaper than £30,360.