CGT  

CGT relief on qualifying disposals to an EOT is reduced from 100% to 50% with effect from 26 November 2025, so that 50% is treated as a chargeable gain arising to the disposer. They will not be able to claim business asset disposal relief or investors’ relief on this gain. The remaining 50% of the gain will continue to be heldover and deducted from the trustees’ acquisition cost.  

The relief cost £600m in 2021/22, a significant increase on the original total cost estimate in 2013 of £100m. The government says that the cost would have risen to £2bn by 2028/29 if the relief had been maintained at 100%.  

Other CGT changes: 

• Incorporation relief. This is given on the transfer of a business to company wholly or mainly in exchange for shares. From 6 April 2026, it will need to be claimed, rather than given automatically.
• Non-resident CGT. The government says that it will close loopholes for protected cell companies and clarify legislation with effect from 26 November 2025.
• Share exchanges and reorganisations. The government intends to modernise the anti-avoidance provisions for share exchanges and reorganisations with effect from 26 November 2025. 

IHT

The government has announced that the £1m allowance for 100% agricultural property relief (APR) and business property relief (BPR) will be made transferable between spouses. In line with the nil rate band and residence nil rate band, individuals whose spouse had passed away before 6 April 2026, will be entitled to an additional £1m allowance from their spouse. These are welcome measures that ICAEW had been pushing the Government to introduce. However, the government also announced that the £1m allowance would be indexed from 6 April 2031 from 6 April 2031, which is 12 months later than originally proposed.

The government intends to introduce a mechanism enabling personal representatives (PRs) to request that pension scheme administrators (PSAs) withhold up to 50% of the pension benefits for up to 15 months, and to pay their share of the inheritance tax on the pension. In addition, PRs will not be liable for IHT on pension pots that only come to light after HMRC has given clearance that the PRs have paid the original IHT liability in full. These are also welcome measures that ICAEW had pressed for, as the previous proposals, under which PRs would be primarily liable for paying all the IHT, were too onerous on PRs and unfair on estate beneficiaries.

The government also announced the following further changes to IHT:

• that the nil rate band, residence nil rate band, including its £2m taper limit, will be frozen for a further year, to 5 April 2031;
• the introduction of a £5m cap on IHT 10 year and exit charges, over each 10-year cycle, for trusts which held excluded property at 30 October 2024, provided that the property remains outside of the UK at the date of each charge;
• a new exemption from IHT for infected blood compensation payments; and
• the introduction of anti-avoidance measures for non long-term residents and trusts and those gifting to charitable trusts which are not charities.

Residency issues

• Technical amendments will be made to the foreign income gains relief, overseas workday (OWR) relief and temporary repatriation facility from 6 April 2025.
• Distributions arising during periods of temporary non-residency that are paid out of a company’s post-departure trade profits will now be taxable on the individual when they return to the UK.
• Overseas workday relief (OWR) and PAYE. When an employer submits a notification to HMRC (a ‘s690 application’) stating the percentage of earnings on which PAYE will be operated for a qualifying new resident employee who is eligible to claim OWR, the employer will be required to limit this to the maximum 30% relief that is allowed under the OWR rules.