Are further changes to capital taxes on the horizon?

The next UK Budget will be presented on Wednesday 26 November 2025, given the radical changes to Inheritance Tax (IHT) put forward last year to help fill the “black hole in public finances”, it is understandable that people, particularly those in the rural sector, are extremely nervous about what could come next. Will the Chancellor increase taxes, decrease spending (or both) to curb the ever-widening gap in public finances?

There is always massive speculation pre-Budget about what changes the Chancellor could impose, unfortunately no-one actually knows, save for the Chancellor herself.

The bottom line, has the Chancellor finished with family farms, or is there more to come? Gut feeling is there could be more; with the IHT changes announced last year, there has been a push to pass assets down to the next generation before April 2026. Applying holdover relief to qualifying gifts means that the capital gains arising can be deferred until such time as the assets are sold.

Agricultural land, in the round, will qualify for this relief, so it is possible that the Treasury will see this as a loophole to bypass the IHT measures being brought in should the donor survive seven years from point of gift. There is speculation that holdover relief on gifts could be restricted or indeed removed to address this “loophole” meaning that future gifts could attract Capital Gains Tax (CGT), currently at 24%, this seems completely counter-intuitive, but it wouldn’t be the first time we have been surprised by tax changes introduced!

The existence of the capital uplift on death has been perceived to be on borrowed time for a while, changing the rules on this as well would leave very little manoeuvre for family farms to get assets to the next generation without some form of significant tax burden.

If this speculation holds any truth, it would be sensible for those considering gifting assets to the next generation prior to April 2026 to accelerate plans and exercise the transfers before the Budget. Please note that this is a complicated area of taxation, therefore appropriate professional advice is strongly recommended.

The information contained herein is given by way of general guidance only, is correct and applicable only at the time of delivery and no action should be taken solely on the basis of the information contained herein. Ensors Accountants LLP will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any actions taken without seeking appropriate professional advice.