Autumn Budget 2026: possible CGT changes and pre-budget planning

The first Autumn Budget on 28 October 2026 under Prime Minister Andy Burnham is fast approaching, and there is increasing speculation as to what changes may be made to Capital Gains Tax (CGT). This is particularly significant given the Prime Minister’s pledge to stick to the Labour manifesto promise of not increasing income tax, VAT and national insurance for working people during this Parliament. As a result, CGT may be one of the more likely targets for revenue-raising measures.

In the 2025 Autumn Budget, relatively few changes to the CGT regime were introduced: the primary change was to reduce CGT relief on Employee Ownership Trusts to 50%, with other amendments to incorporation relief, the definition of a UK property rich entity, double tax treaty claim deadlines, and the anti-avoidance rules on share reorganisations.

In this article, we set out the changes we think may be made and what pre-emptive action individuals might consider taking. The changes discussed below are speculative and of course no one can say with certainty what the Autumn Budget will bring, but the potential implications are significant enough to warrant early consideration. Any planning should however be undertaken with caution and full appreciation that these speculations may not come into effect.

What changes may be introduced?

The new Chancellor John Healey has not specifically commented on changes to the CGT regime. The following are the most likely areas of reform.

Increasing the rates of CGT

Rachel Reeves increased the lower main rate of CGT from 10% to 18% for basic rate taxpayers and the higher main rate from 20% to 24% for higher or additional rate taxpayers. John Healey may seek to further increase these rates, whether incrementally or more radically by aligning CGT with income tax.

An incremental increase remains the more modest option, but even here the fiscal case for an increase is uncertain. The influential Centre for Policy Studies (CPS) think-tank suggested that a 10 percentage point increase on the higher rate of CGT would lead to a £3.6bn reduction in revenue by 2028/29. The Institute for Fiscal Studies (IFS) also published an in-depth report in 2024 that concluded that the whole design of CGT is flawed, and that higher rates of CGT would only worsen the problems.

If the government does consider introducing a substantial increase in CGT rates, there may also be pressure to reintroduce some form of indexation allowance or taper relief to account for inflation. Indexation allowance was available to individuals until April 1998, when it was frozen and replaced by taper relief (later abolished). For companies, indexation allowance remained available until December 2017. The allowance ensured that taxpayers were only charged CGT on real gains above inflation rather than on nominal gains eroded by rising prices. The IFS’s 2024 report argued that the absence of any inflation adjustment is one of the fundamental design flaws of the current CGT system, and that higher rates without such relief would disproportionately penalise long-held assets. Whilst reintroduction would add considerable complexity to the CGT framework, it may become politically difficult for the government to resist if rates are significantly increased.

A more radical option would be to align CGT rates with income tax rates entirely. Wes Streeting first proposed this in his leadership pitch in May this year, and although he withdrew from contention, he remains close to Andy Burnham, having accepted the position of defence minister.

This proposal would see three bands of CGT introduced, at 20%, 40% and 45% of the increase in profit made on selling an asset. A person’s CGT band would be calculated by combining their annual income and the profits generated on assets.

However, the revenue case for alignment is similarly uncertain. An analysis by IG using HMRC’s own methodology suggests that increasing CGT from 24% to 40% for higher rate taxpayers would result in £3.2 billion in lost revenue annually, and increasing it to 45% for additional rate taxpayers would result in £4.6 billion in lost revenue annually. That amounts to an estimated £7.6 billion in reduced tax receipts, driven primarily by higher CGT rates discouraging the sale of assets and thereby reducing the volume of taxable disposals. Despite the fiscal risks, the government may still pursue alignment on grounds of fairness and simplicity, but the economic evidence suggests it would need to be carefully calibrated.

Removing or limiting the CGT uplift on death

Under the current tax regime, capital gains or losses on assets held at their owner’s death are effectively wiped out through “rebasing” their value to the value at the date of death. The recipient therefore inherits the asset at that rebased market value at that date, rather than inheriting the deceased’s base cost from when they acquired the asset. 

The IFS has estimated that relatively significant tax has been foregone (approximately £1.5 billion) as a result of such rebasing on death. They suggest that death would be treated as a disposal event for CGT purposes, which would trigger a charge at that point. Alternatively, such inherited assets could pass to beneficiaries without rebasing, making CGT chargeable when the assets are disposed of by the recipient instead. 

The principal objection against a change of this kind is that it could result in double taxation, whereby CGT and inheritance tax (IHT) would be on the same asset on the death of the current owner. 

A change that would get around that issue would be to couple CGT and IHT reform together, which might also simplify the tax regime. For example, if the asset qualifies for an IHT relief, the CGT uplift could be denied to remove the issue of such punitive taxation. 

However, IHT reliefs were already reduced in the 2025 Budget, including the reduction of Agricultural Property Relief (APR) and Business Property Relief (BPR) to only 50% on assets over a combined threshold (initially set at £1m and subsequently increased to £2.5m following consultation), although assets within that threshold continue to attract no IHT charge. As a result, the assets that previously would have benefited from 100% relief now effectively have an IHT charge of 20% on the excess. Further denying the CGT uplift on any “relieved” aspect could lead to a very complicated reporting calculation.

Changes to Business Asset Disposal Relief (BADR)

BADR, formerly known as ‘Entrepreneurs Relief’, was significantly altered in the March 2020 Budget when the lifetime limit on qualifying gains was reduced from £10m to £1m. More recently, phased changes introduced in the 2024 Budget increased the BADR rate from 10% to 14% from 6 April 2025, and then to 18% from 6 April 2026, bringing it in line with the current lower main rate of CGT.

The government may seek to remove the lower rate and tax it in line with the higher and additional rate of 24%. They could also reduce the £1m lifetime limit on gains that can qualify for BADR. The IFS estimated prior to the 2024 Budget that abolishing BADR would raise about £1.5 billion in tax revenue, and the government may well seek to recoup some amount of this sum. However, it seems likely to primarily hurt small-to-medium enterprise owners, which Labour is likely to want to avoid in the interests of stimulating economic growth. 

Limiting or removing other reliefs or exemptions 

A key CGT exemption is that on a person’s main residence, which is free of CGT. The Treasury might seek to set a limit on the value of properties that qualify for this exemption, to tax high-value properties.

They could also remove or reduce the CGT exemption for “wasting assets” such as wine and classic cars. 

A further strategy could be to remove holdover relief for gifts of business assets and/or gifts into trust, such that CGT becomes payable on making the gift, which would prevent the deferral of that charge and the passing of the inherent value gain on to the recipient. 

The revenue-raising potential of these measures varies considerably. In particular, the main residence exemption is one of the largest single tax expenditures in the UK, and even a targeted restriction on high-value properties could raise material sums. By contrast, changes to the wasting assets exemption or holdover relief would likely raise more modest amounts.

When might any changes take effect? 

Any change to the CGT rates or rules would usually come into effect at the start of the new tax year (i.e., from 6 April 2027) but it is possible that any changes have immediate effect. For example, the October 2024 Budget increased the basic rate and the higher rate with immediate effect, demonstrating that mid-year changes are not unprecedented.

An immediate change in the tax regime would leave no opportunity for individuals to do any wealth planning ahead of any such new rates or rules. Therefore, individuals who own assets subject to significant capital gains may be considering what pre-emptive actions they could take to minimise their CGT exposure.

What action may be taken ahead of the Budget to lock in current tax rates?

Disposal strategies

Crystallising gains

Pre-emptive action to crystallise any accrued but unrealised capital gains is a path many individuals are choosing, and it may have led to sufficient revenue generation already.

It is worth noting that pre-Budget uncertainty itself, whether strategic or otherwise, plays into the Exchequer’s hands in the short term if it triggers disposals and thereby swells Government coffers. However, in the medium to longer term, such uncertainty may stall economic activity if individuals bide their time and avoid disposals in the hope that rates may change for the better — particularly where “patient capital” and long-term investment decisions are concerned.

For some looking to crystallise CGT this may mean fast-tracking of a sale planned for the near future. In other cases, where there is no obvious "purchaser”, individuals are looking for opportunities to crystallise a gain early. One method is selling an asset into a trust at market value, with the consideration left outstanding as a debt owed by the trust to the individual. This approach triggers the gain at current rates, and the individual retains an economic interest through the outstanding debt.

Any individuals who have not yet considered changes to CGT may wish to think about accelerating their disposal of the asset before the Autumn Budget, perhaps only to some extent e.g. to cover the £1m BADR allowance. This has the benefit of crystallising any gain whilst there is certainty about the rates. The downside of course is that the individual loses control of their asset and it may not fit with the individual’s personal or commercial plans for the asset.

Sale and buyback of quoted shares

For quoted shares specifically, one option is to sell them and then later buy the shares back either through one’s spouse or after waiting 30 days to avoid the “bed and breakfasting” anti-avoidance rule (TCGA 1992, s 106A), which would otherwise match the sale and repurchase and negate the crystallisation of the gain. However, individuals should be aware that HMRC may challenge pre-arranged spousal transfer arrangements under the general anti-avoidance principles and this strategy does create complications for family-run businesses, so it is not a universally suitable solution.

It is also not wholly free of transaction costs. Where shares are bought by a trust or by a spouse, or are repurchased after the 30-day period, stamp duty is generally chargeable at 0.5% of the purchase price, a cost which should be built into the tax calculation before any sale is made.

Gifting into trust

An individual could gift the asset to a settlor-excluded trust and elect not to claim holdover relief, thereby triggering the gain at current CGT rates. While holdover relief would ordinarily be available on such a gift, electing not to hold over ensures the gain is crystallised now rather than deferred to a future disposal by the trustees, which may be subject to higher rates. The downside is the loss of control over and benefit from the asset, although a carefully structured trust can mitigate some of these concerns. The further downside is the dry tax charge. Individuals should also be mindful of the IHT implications: a transfer into a trust may give rise to an immediate entry charge where the value exceeds the nil rate band.

Tax-efficient wrappers and allowances

Maximise use of ISAs and pensions 

Individual Savings Accounts (ISAs) and pensions function as tax wrappers that shelter investments from CGT entirely. Profits and gains from selling investments inside an ISA, and the growth in value of investments held in registered pensions are both entirely free of CGT. Maximising these investment routes is one way to keep CGT minimal, although from 6 April 2027 all registered pension schemes (not just Self Invested Personal Pensions) will be included in your estate on death for IHT purposes, which may affect how you choose to use them. 

Use spousal transfers for holdover purposes

Assets can be transferred between married couples and civil partners free of CGT on the basis that there is no gain to one and no loss to the other. CGT only becomes payable when the receiving spouse disposes of the asset to a third party. 

Use up the annual exemption

While significantly reduced, the remaining £3,000 CGT allowance still allows for some savings and it renews annually, so individuals should be sure to maximise its use. 

Other considerations

Become non-resident in the UK 

While non-UK residents are generally free of CGT, important exceptions apply: CGT remains chargeable on disposals of interests in UK land and on disposals of interests in certain UK land-rich companies (sometimes known as “property rich” companies). There are also many rules governing non-resident status, and there have even been calls to apply a CGT exit charge for people becoming non-resident. Anyone considering this option should also carefully think through how they would manage spending years at a time outside the UK.

Do nothing

The final option that some individuals are taking is simply to wait and see what happens, since at this stage, any potential tax changes remain a matter of speculation, and tax-planning decisions usually have significant implications. 

Next steps

Labour in general, and Andy Burnham and John Healey in particular, have given few clear suggestions over what, if any, changes may be made to the CGT regime. Given this uncertainty, there is no universal solution for concerned individuals, and any pre-Budget planning should be carefully thought through. Although urgent action may be needed, there is still time to take advice on the points raised in this article. If any of these concerns are relevant to you, please contact the Private Client team at Charles Russell Speechlys for further information.