Capital Gains Tax: surrendering rights for capital sums
Published 28 October 2026
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This publication is available at https://www.gov.uk/government/publications/capital-gains-tax-capital-sums-received-for-surrendering-rights/capital-gains-tax-surrendering-rights-for-capital-sums
Who is likely to be affected
Individuals, trustees and companies that surrender rights under a contract.
General description of the measure
This measure clarifies that for capital gains purposes a capital sum for surrender of rights includes a capital sum received under a contract for loss of right under that contract.
Policy objective
The capital gains legislation applies to compensation payments, insurance payments for damage, and capital sums received for forfeiting, surrendering or refraining from exercising rights. A recent First-tier Tax Tribunal decision held that a payment made under a contractual provision did not constitute a sum received for the forfeiture or surrender of rights, or refraining from exercising rights for capital gains purposes.
This measure clarifies that such capital sums received under a contract for the loss of rights fall within the scope of capital gains.
Background to the measure
This measure was announced at Budget 2026.
Detailed proposal
Operative date
This measure will have effect for capital sums received in return for loss of rights under a contract on or after 28 October 2026.
Current law
Section 22 Taxation of Chargeable Gains Act 1992 defines disposal for capital gains purposes and explains what happens where a capital sum is derived from an asset. It brings into the scope of capital gains compensation payments, insurance payments for damage and at section 22(1)(c) capital sums received for forfeiting, surrendering or refraining from exercising rights.
Proposed revisions
This measure amends section 22(1) and clarifies that capital sums received for forfeiting, surrendering or refraining from exercising rights also includes a capital sum received under a contract in return for the loss of rights under that contract.
Summary of impacts
Exchequer impact (£million)
| 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 | 2031 to 2032 |
|---|---|---|---|---|---|
| — | — | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact. This measure supports the Exchequer in its commitment to protect revenue.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure primarily impacts on UK resident individuals and trustees who have received a capital sum in return for the loss of rights under a contract.
As this is a technical change, individuals will not be required to do anything differently.
This measure is expected overall to have no impact on individuals’ experience of dealing with HMRC.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
This measure may apply to individuals regardless of their protected characteristics. The population impacted is expected to be a small subset of the Capital Gains Tax population. HMRC does not hold data that it can use to assess whether there are any disproportionate impacts to protected groups.
Administrative impact on business including civil society organisations
The measure will have an impact on those businesses that have received a capital sum in return for the loss of rights under a contract.
One-off administrative costs could include companies familiarising themselves with the change. There are not expected to be any further one-off or continuing costs.
This measure is not expected to disproportionately impact civil society organisations or businesses.
Operational impact (£million) (HMRC or other)
This measure will not require changes to HMRC’s processes or resources.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through regular communication with affected taxpayer groups.
Further advice
If you have any questions about this change, contact the Capital Gains Tax policy team by email cgtbudget@hmrc.gov.uk.