FORTHCOMING CHANGE relating to call for evidence on tax support for entrepreneurs: At Budget 2025, the government published a call for evidence (closing date: 28 February 2026) on the impact of existing tax incentive schemes and options to provide further support for entrepreneurs. The call for evidence focuses in part on the venture capital schemes and on enterprise management incentives. However, it also refers to investors’ relief and, more specifically, asks about how the tax system can support reinvestment by successful entrepreneurs, including the role and effectiveness of business asset disposal relief. Business asset disposal relief (BADR), (formerly known as entrepreneurs' relief) is a capital gains tax (CGT) relief that is designed to encourage individuals to set up and expand their own businesses. Provided that the conditions are satisfied, gains on the sale of certain business assets are taxed at a reduced rate. BADR attracts the same rate of tax as investors’ relief (the BADR Rate). The BADR Rate was 10% until 5 April 2025. It rose to 14% in relation to disposals

Business asset Capital gains tax (CGT) may be payable on a gain from the disposal of all or part of a business asset. What is a business asset? A business asset is an asset related to a trade or business owned by an individual or the business. Examples of business assets include: • a factory • farm buildings • agricultural land • plant and machinery • a furnished holiday letting (FHL) • shares • registered trade marks Business assets attract relief from CGT; investment assets do not. CGT reliefs can be applied if an asset has been used for business purposes. Furnished holiday accommodation For a property to qualify as a FHL and take advantage of CGT relief it must be: • in the UK or European Economic Area (EEA) • furnished (sufficient furniture should be provided for occupation as holiday accommodation) • available for commercial letting to the public as holiday accommodation for at least 210 days (the availability condition) • commercially let as holiday accommodation for at least 105 days a year (the occupancy condition) • let

Date of disposal The date that an asset is treated as being disposed of determines the period in which the gain is subject to capital gains tax (CGT) or the loss is available to offset other gains. This is paticularly important where there is a change in the rate of CGT from one tax year to another (or during a tax year, as occurred in 2024–25). The date of disposal also affects when any CGT becomes due—this is generally by 31 January after the end of the relevant tax year in which the disposal is made. However, there are different rules applicable to disposals by non-residents and also in relation to UK residential property, as explained below. The rules for determining the date of disposal vary according to the type of disposal made. Non-resident CGT Where a non-resident taxpayer disposed of a UK residential property between 6 April 2015 and 5 April 2019, the disposal had to be reported to HMRC within 30 days of the conveyance of the property, which was likely

A gift of an asset is a disposal for capital gains tax (CGT) purposes. It can, therefore, trigger a CGT charge on the gain deemed to have arisen. The general rule The disposal made by way of a gift is deemed to have been made for a consideration equal to the market value of the asset. The donee or transferee’s base cost will be the market value of the asset. For information regarding the disposal value, see: Introductory guide to CGT. The same treatment will apply for any bargain made otherwise than by way of bargain at arm’s length, which may include a sale at an undervalue, but not in every case. Any gain triggered on a gift or sale at an undervalue will be taxable in the normal way, and losses will be allowable in the normal way. Gifts between spouses and civil partners A gift to a spouse (or civil partner) will not trigger any gain or loss, provided the couple are living together. The transferor is treated as making the disposal

Where an asset is acquired or disposed of otherwise than at arm’s length (ie there is a gift or a transfer at an undervalue), this is a disposal for capital gains tax (CGT) purposes. The chargeable gain on this disposal is calculated on the basis that the deemed consideration is the market value of the asset (whether or not the transferor and transferee are connected). A CGT charge may therefore arise even though there is no cash or other consideration to pay the CGT. In these circumstances, hold-over relief may be particularly useful. CG67034Hold-over relief allows a chargeable gain arising on certain types of disposal to be deferred. Where the relief is claimed, no CGT is due in respect of the chargeable gain arising on the disposal. Instead, the base cost on the future disposal of the asset by the transferee is reduced by an amount equal to the gain that would otherwise have arisen. Consequently, the gain on which tax would otherwise have had to be paid is deferred until the

Introduction A charge to capital gains tax (CGT) arises when a chargeable person makes a chargeable disposal of a chargeable asset. The disposal may produce a gain or a loss. These principles are explained in the Practice Note: Introductory guide to CGT. This Practice Note covers the general rules used to calculate whether or not an individual has made a gain or loss on the chargeable disposal of a chargeable asset. Basic CGT calculation The standard pro forma for calculating the chargeable gain on the disposal of chargeable assets from 6 April 2008 onwards is a basic calculation of the cash profit: Sale proceeds less deductions £ £ Proceeds of sale P   Less: costs of sale (C)   Subtotal   X Deduct:     Costs of acquisition (A)   Plus: enhancement expenditure (E)   Subtotal   (A+E) Chargeable gain or allowable loss   G Allowable deductions from the proceeds Deductible costs of sale are any incidental

FORTHCOMING CHANGE relating to call for evidence on tax support for entrepreneurs: At Budget 2025, the government published a call for evidence (closing date: 28 February 2026) on the impact of existing tax incentive schemes and options to provide further support for entrepreneurs. The call for evidence focuses in part on the venture capital schemes and on enterprise management incentives. However, it also refers to investors’ relief and, more specifically, asks about how the tax system can support reinvestment by successful entrepreneurs, including the role and effectiveness of business asset disposal relief. Investors’ relief is a capital gains tax (CGT) relief designed for individuals who invest in unquoted trading companies, without being involved in the management or operation of the business. These investors cannot generally qualify for business asset disposal relief (BADR, formerly entrepreneurs’ relief, see Practice Note: CGT—business asset disposal relief (formerly entrepreneurs' relief)) on realising their investment, and would therefore, in the absence of investors’ relief, be taxed at the standard CGT rates. Investors' relief attracts the same rate of tax as BADR (the Investors'

Basic principle An individual works out the gain or loss when land is disposed of in the same way as for other assets. There are some special rules for working out gains and losses if the individual: • grants a lease • assigns or surrenders a lease • disposes of land that has been compulsorily purchased Leases For tax purposes as the landlord has retained a part of the interest the grant of a lease is a part disposal whether out of a freehold or leasehold interest. Grants of leases fall into three categories: • a long lease out of a freehold or long leasehold interest • a short lease out of a freehold or long leasehold interest • a short lease out of a short leasehold interest Definition of lease For capital gains tax (CGT) purposes a lease includes: • subleases • tenancies • licences • any interest corresponding to a lease What is a long and short lease? A long lease is a lease with more than

HM Revenue and Customs [Insert HMRC address] [Insert date] Dear [insert organisation/department name] I am writing to notify you of my election that the following property be treated

HM Revenue and Customs [Insert HMRC address] [insert date] Dear [insert organisation/department name] We are writing to notify you of our joint election that the following property be treated as the principal residence of [insert individual beneficiary’s name] with effect from [insert

Principal private residence relief Where a person has more than one residence, they may, by notice to HMRC, nominate which is their main residence for principal private residence (PPR) relief purposes. In this circumstance, any periods of actual ownership (by election) by the individual of their PPR should be treated as exempt from capital gains tax (CGT), provided there has been a previous period of actual occupation. In addition to this, the last nine months of ownership should always be treated as a period of occupation. Before 6 April 2014, the exemption covered the final 36 months of the period of ownership but it was halved to 18 months from 6 April 2014 and was halved again to nine months for disposals on or after 6 April 2020. Individuals who are disabled or in a care home and with no other property on which they can claim PPR relief continue to get the 36 month final period exemption. The PPR relief exemption applies to: • a ‘dwelling house’

CGT reliefs most relevant to Private Client Various reliefs apply to reduce or postpone the impact of capital gains tax (CGT) on disposals of business and personal interests. The reliefs of most interest to the Private Client practitioner are: • principal private residence (PPR) relief under sections 222–226 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) • business asset disposal relief (BADR) (formerly entrepreneurs' relief) under TCGA 1992, ss 169H–169V • investors' relief under TCGA 1992, ss 169VA–169VY and Sch 7ZB • hold-over relief under TCGA 1992, s 165 or 260 • business asset roll-over relief under TCGA 1992, ss 152–157 • roll-over relief on the exchange of joint interests in land under TCGA 1992, ss 248A–248E • incorporation relief under TCGA 1992, s 162 • enterprise investment scheme (EIS) deferral relief under TCGA 1992, s 150C and Sch 5B • seed enterprise investment scheme (SEIS) reinvestment relief under TCGA 1992, s 150G and Sch 5B • venture capital trust exemption (VCT) under TCGA 1992, s 151A • social investment tax relief (SITR) deferral relief under