Capital Gains Tax: Incorporation Relief claims process
Published 26 November 2025
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Who is likely to be affected
Individuals, partners in a partnership and trustees who are transferring a business to a company in exchange for shares in that company.
General description of the measure
This measure means that a claim for incorporation relief will need to be made by the transferor in their Self Assessment return for the tax year in which the transfer took place. Claimants will be asked to provide brief details of the transaction, the tax computations and type of business transferred.
Policy objective
This measure will improve the data available to HMRC, allowing for more analysis of the relief and better targeting of compliance resource to tackle avoidance.
Background to the measure
This measure was announced at Budget 2025.
Detailed proposal
Operative date
This measure will have effect for transfers of a business on or after 6 April 2026.
Current law
Current law is contained within Section 162 of the Taxation of Chargeable Gains Act (TCGA) 1992 which provides for rollover relief on the transfer of a business to a company.
Section 162A of TCGA 1992 allows the transferor to make an election for the relief not to apply.
Proposed revisions
Legislation will be introduced in Finance Bill 2025-26 amending Section 162(1) TCGA 1992 to include a requirement for the transferor to make a claim in the return for the tax year of the transfer with such information as the Commissioners of HMRC require.
Section 162A TCGA 1992 is repealed.
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| 0 | 0 | 0 | 0 | +110 | +115 |
These figures are set out in Table 4.1 of Budget 2025 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.
Macroeconomic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure will primarily impact on those individuals who transfer their business to a company as they will now need to provide details of the transaction to HMRC.
This measure is expected overall to have no impact on individuals’ experience of dealing with HMRC.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
The population impacted by this measure are likely to be wealthy individuals, who tend to have an overrepresentation of males and older age groups.
HMRC does not currently hold data on the other protected characteristics of individuals impacted by this measure and so cannot make an assessment of the impacts on those with shared protected characteristics.
Administrative Impact on business including civil society organisations
This measure will have a negligible administrative impact on an unknown number of business owners when they transfer to a company as a claim will need to be made.
There will be an additional administrative requirement in completing the claim on the Self Assessment return. There may be one-off costs for businesses using an agent to check the claim is correct or completing the tax computation. There are not expected to be further one-off or continuing costs.
Customer experience is expected to remain broadly the same, as the claim is submitted via the Self Assessment process. We expect impacted customers to already be within Self Assessment.
This measure is not expected to impact civil society organisations.
Operational impact (£ million) (HMRC or other)
Delivery costs to HMRC associated with this measure are expected to be £3.41 million for the necessary changes to Income Tax Self Assessment and associated systems. This figure is an upper bound, high-level estimate and includes a significant contingency to reflect the level of uncertainty. Final costs are dependent on other changes being made as part of the government’s wider Budget package. Changes are also required for Making Tax Digital (MTD) which may impact on delivery. The GOV.UK website and guidance for completing the return will be updated as a result of this measure.
No additional HMRC staff resource will be required.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through the monitoring of claims for the relief on tax returns.
Further advice
If you have any questions about this change, contact the Capital Gains Tax policy team by email at cgtbudget@hmrc.gov.uk.