Capital Gains Tax and the Budget. Planning without speculation

An upcoming Budget speech can have an impact on people when they are already thinking of selling an asset. It can turn a considered, well-thought-out decision into a burning deadline. A business that has been prepared for sale, a property held for years or a large holding in one company can suddenly look like a problem to solve before the Chancellor speaks.

The temptation to act is understandable but it’s important to remember that a rumour is not a tax rule, and a disposal cannot usually be undone. The central question is simple: would you still want to sell if the Budget made no change to capital gains tax (CGT)?

If the answer is yes, tax timing may be relevant. If the answer is no, bringing forward the sale is less tax planning than speculation.

This article is based on current legislation and announced policy at the time of writing. Tax treatment depends on individual circumstances and may change. It is not personal financial advice or a recommendation to take any particular action. All investments carry risk and you may get back less than you originally invested.

At the time of writing, the only firm fact is the date of the Budget (28 October 2026). No CGT measure has been announced, but the main rumours are:

• Higher rates

• Possibly moving closer to income tax

• Tighter reliefs

• The exemption for gains on your primary residence

• Changes to the CGT uplift on death

• Preventing income from being reclassified as capital gains

It’s important to remember when making decisions in relation to your own circumstances this is a menu of possibilities, not a forecast.

Selling an asset changes more than a tax calculation. It can change your source of income, the balance of risk and the options available to you. It could be life changing.

A sensible place to start when making your choice whether or not to sell by a certain date should potentially begin with factors such as the quality and certainty of the offer, the likelihood of completion, the cost of continuing to own the asset, the need for liquidity and the consequences of waiting. If you decide to wait for the Budget:

• A concentrated shareholding may rise or fall

• A business sale may be delayed, repriced or lost

• A property transaction may carry financing and maintenance costs

When deciding what is the best course of action for you, it could be useful to compare the following scenarios:

• Sell on the current timetable

• Assume no change in the rules

• A change with a less favourable tax outcome

• A change with a more favourable tax outcome

The comparison should include the net proceeds, not simply the headline tax rate. A lower tax bill is of little comfort if it comes with a lower sale price, weaker terms or a long period of unwanted risk.

This is where cashflow modelling could help. We can model how each scenario may affect your future income, spending, tax reserves, liquidity and investable capital. It can show whether your wider plan remains viable if a sale is delayed, proceeds are lower or the rules change, subject to the assumptions used. This could give you a clearer basis for deciding whether to act now or wait for confirmed policy.

CGT is charged on the gain, not the sale price. The calculation can involve the original cost, qualifying improvement and transaction costs, reliefs, allowable losses and your wider taxable income. The tax year in which the disposal takes place matters, as does the detail of the legal agreement.

At the time of writing, most individual gains are taxed at 18% or 24%, with the annual exempt amount set at £3,000 for 2026-27. Qualifying gains under Business Asset Disposal Relief (BADR) are taxed at 18%, subject to the relief's conditions and £1 million lifetime limit. These are the current rules, not confirmation of what the Budget may do.

This is where seemingly small details can have a large effect. Allowable losses may reduce gains in the same tax year, while unused losses can be carried forward if claimed. The annual exempt amount cannot be carried forward. For a UK residential property sale, any CGT due generally has to be reported and paid within 60 days of completion. Cashflow, not just tax, therefore matters.

The proceeds may also arrive in stages. An earn-out, deferred consideration, a retained loan account or a continuing interest in a business may not receive the same tax treatment as cash paid on completion. Nor does a business sale necessarily produce one type of tax outcome. The following can lead to different results:

• A sale of shares

• A sale of assets by a company

• The extraction of cash

The transaction needs to be modelled in full, including income, corporation tax and the tax cost of taking money out of the company where relevant.

If you’re a business owner, BADR can be important but it is not a relief that can be applied at the end of a deal. Broadly, the relevant conditions must be met for a two-year qualifying period. Share disposals can require the company to be a trading company, the owner to be an officer or employee and the holding to meet minimum tests. The relief has a £1 million lifetime limit.

An Employee Ownership Trust (EOT) may offer a different route. It is a succession and governance arrangement as much as a tax measure: the employees acquire a controlling interest and the business must continue to satisfy conditions. For qualifying disposals made on or after 26 November 2025, half of the gain is exempt from CGT and BADR cannot be claimed on the same disposal. Relief can also be withdrawn if the trust later experiences a disqualifying event.

The point is not to choose between BADR and an EOT in a hurry. You may want to firstly consider what outcome is wanted for your business, your employees and your family. Only then should the tax effects of each route be compared. A transaction that works commercially and meets the conditions is more robust than one built around a rumoured change to a rate.

A disposal is not necessarily complete when the money arrives.

The first job may be a reserve for tax, debt, deferred commitments and near-term spending. Financial planning can then translate the remaining capital into a plan, answering questions such as:

• How much do I need to pay for my desired lifestyle?

• What should I retain for flexibility?

• How much can I gift or pass to my loved ones?

• How does the sale change my pension, estate planning or charitable decisions?

• Could some of the sale proceeds be invested in assets qualifying for Business Relief as part of my IHT plan?

Investment management has a related task. A business, property or concentrated shareholding may have made up too large a proportion of a portfolio. Once sold, that concentration becomes cash concentration. Not all the proceeds will necessarily need to be invested immediately. Some may belong in a liquidity reserve, while the rest could potentially be diversified and invested in line with the time horizon and the capacity to bear loss. A staged investment approach may be appropriate for some people, but it should be a plan, not a nervous response to each headline.

There is a disciplined middle course between ignoring the Budget and rushing to beat it.

Keep preparing the sale if it is the right choice for you and your circumstances. It’s important to bear in mind that the Budget may change your arithmetic, but it need not decide your strategy.

To find out more, speak to your usual Evelyn Partners contact or book an appointment online.