The Chancellor delivered the 2026 Budget on 28 October 2026. Whilst the main rates of capital gains tax and income tax on earnings remain unchanged, several measures will affect how individuals hold investments, plan the sale of a business and structure their wealth. Below, we summarise the key changes that are most relevant to our clients and consider their practical implications.
Property and Savings Income
Following the 2% increase announced in the 2025 Budget, the government has confirmed a further 2% increase to the rates of income tax applicable to property and savings income. From 6 April 2027, the rates on property and savings income will be 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for additional rate taxpayers. The savings rates apply across the UK, whilst the property rates apply in England, Wales and Northern Ireland.
For landlords, higher earners and those who rely on investment income, there will be a noticeable reduction in net returns. This may impact investment decisions and long-term financial planning. Landlords, in particular, may experience additional pressure on profitability where these rising taxes are combined with the cost of maintenance of the property.
Those holding rental property or significant cash savings in their own names may wish to consider whether their current ownership structure remains the most appropriate and tax efficient.
Business Asset Disposal Relief
Business Asset Disposal Relief reduces the amount of capital gains tax applicable to qualifying gains when business assets, such as shares, are disposed of. The reduced tax rate is 18%. From 6 April 2027, the lifetime limit on gains that can benefit from the relief will be halved from £1 million to £500,000, its lowest level since the relief was first introduced in 2008.
Previous claims count towards the new £500,000 lifetime limit, so individuals who have already used £500,000 or more of qualifying gains may have no Business Asset Disposal Relief available for future disposals. The change also applies to trustees disposing of qualifying business assets. Any qualifying disposal by trustees will count towards the lifetime limit of the relevant qualifying beneficiary.
For those considering a sale of a business asset, early advice on timing and structure will be important.
Founders’ Relief
The government will be introducing a new Founders’ Relief which, from 6 April 2027, would allow founders of high-growth companies to benefit from a reduced capital gains tax rate of 10% on qualifying share disposals. This relief will be subject to a lifetime limit of £10 million of eligible gains. There are a number of conditions that must be satisfied, including, a requirement for the individual to hold at least 25% of the shares from the start of trading, to have held the shares for five years, and be resident in the UK for five continuous tax years prior to the disposal. Further conditions apply in relation to the company’s size, UK presence and growth or innovation. The consultation closes on 30 November 2026, so the detail may still change.
CGT Exit Charge on Trusts Temporarily Moving to the UK
Currently, when a UK resident trust ceases to be resident in the UK, the trustees are generally deemed to dispose of and immediately re-acquire all settled property at its market value immediately before they cease to be UK resident. Any resulting gains may give rise to a CGT exit charge. Where a trust becomes UK resident solely because one or more of its trustees moves to the UK, that charge will no longer arise if the trust ceases to be UK resident in the same year or the following year.
This change was effective from 28 October 2026 and may influence trustees who are considering relocating to the UK, although the wider UK tax reporting requirements should still be taken into account before any move.
Stamp Duty Land Tax Group Relief
Currently, where the Seller and Buyer are members of the same group, SDLT group relief can apply to exempt the transfer from SDLT. To qualify for the relief, the Seller and Buyer must continue to remain group companies for three years from completion of the transaction. If they cease to be group companies within that period, then group relief is withdrawn and SDLT becomes payable. An exception is applied in cases where the Buyer ceases to be a member of the group because of the winding up of either the Seller or the company above the Seller. In those circumstances, relief is not withdrawn.
Under the new measure, where the winding up exception applies, group relief will be withdrawn if there is a subsequent change of control of the Buyer within the three-year period following completion. Here SDLT will be payable.
This measure was effective from 29 October 2026, therefore groups considering future disposals or changes of control will need to review intra-group property transfers carefully, as transactions that previously fell within the winding-up exception may now give rise to an SDLT charge.
Overall impact
These changes highlight the importance of reviewing how investments, business interests and trusts are structured. Whilst some measures are already in force, those taking effect from 6 April 2027 allow time to consider whether existing arrangements remain appropriate. Early advice will be important for those considering changes to their arrangements or planning for the next generation.
If you would like to discuss how these changes may affect you or your family, please contact our Private Client team.