Are You Ready for a Capital Gains Tax Shakeup?

Hi everyone,  

For those of us who have built something from the ground up—a dental practice, a business, a legacy—the question is: how do you keep it all growing while staying ahead of the tax game?  

It's not just about the profits you make today, but how much you can hold onto when the time comes to sell or pass it on. The tax landscape is always shifting, and the October budget might just throw another curveball our way. 

There’s growing speculation that capital gains tax (CGT) could soon be aligned with income tax rates. If you’re thinking, “Here we go again,” you’re not alone.  

The last time we saw something like this was back in the Gordon Brown era. And with Rachel Reeves at the helm, who’s been known to follow his playbook, we might see a similar shift, including the return of taper relief. For those of us running businesses, this could be a mixed bag. 

CGT in the UK is currently 10% for basic rate taxpayers and 20% for higher-rate taxpayers. If aligned with income tax, the top rate could jump to 45%. 

On one hand, entrepreneurs might breathe easier if Business Asset Disposal Relief (BADR) stays intact. Entrepreneurs currently benefit from a reduced CGT rate of 10% on lifetime gains up to £1 million. Tighter conditions could impact many small business owners who rely on this relief when selling their business. 

On the other hand, Reeves might bring back Business Asset Taper, a move that could drop CGT rates to 10% after holding an asset for 10 years.  

This could be a silver lining for those planning long-term investments, but it’s still a gamble in today’s unpredictable market. 

And don’t forget about private residence relief—it could be slashed. If you own property or plan on selling, this might hit home.  

The most controversial possibility? Scrapping the CGT-free uplift on death.  

Abolishing the CGT-free uplift on death could result in beneficiaries inheriting an asset’s original cost, which could significantly increase taxable gains. In 2022-23, over £6.1 billion was collected through inheritance tax—scrapping the uplift could drive that figure higher. 

This shift alone could significantly alter how wealth is transferred and taxed, forcing many to rethink succession planning. 

What should you do?  

Stay informed and agile. If you're planning on selling, this might just be the nudge you need to take action sooner rather than later. It’s a period of uncertainty, but those who prepare can turn it into an opportunity.  

Stay tuned, as changes like these don’t just impact your pocket—they can reshape the way you run your practice, invest, and plan for the future. 

Take action now—don't wait for the budget to catch you off guard.  

Schedule a call to review your business’s tax strategy and safeguard your hard-earned assets. Let’s ensure you're prepared for whatever changes come your way. 

Until next time, 

Arun