Capital gains tax reliefs

BADR

Qualifying gains are taxed at 14% in 2025/26 and 18% from 2026/27.

Applies to material disposal of business assets:

• The whole or part of a sole trade or partnership

• Shares in a personal trading company

Conditions for both must have been satisfied for at least 2 years prior to disposal.

Personal trading company:

• Employee or director

• At least 5% of ordinary share capital

Gift relief

If an asset is gifted it is treated as a disposal at market value by the donor.

Gift relief is available for business assets but the claim must be made jointly by the donor and donee. The gift relief claimed is deducted from the base cost of the donee.

Business assets:

• Shares in an unquoted trading company

• Shares in a personal trading company (at least 5% voting rights)

• Assets used in a sole trade, partnership or personal trading company

• Agricultural land and buildings

Private residence relief

Full relief - 100% relief if this has only been used as your main home.

Partial relief - used a fraction based on the time you lived there compared to total ownership (final 9 months are tax free)

What is rollover relief?

Applies when a trader sells one asset and replaces it with another in the period 12 months before to 36 months after the sale.

If proceeds are fully reinvested, the gain is deducted from the base cost of the new asset.

If proceeds are partially reinvested, the cash retained is chargeable.

Qualifying assets:

• Land and buildings

• Fixed plant and machinery

• Goodwill (individuals only)

What are the restrictions on rollover relief?

Partial business use - only the part relating to the business qualifies for rollover relief.

What is SSE - substantial shareholding exemption

A corporation tax replied that exempts companies from paying corporation tax on capital gains when disposing of qualifying assets.

Qualifying assets - a 10% or greater holding of share capital in a trading company for at least 12 months