United Kingdom: Capital Gains Tax

Family limited partnerships offer US-UK families a flexible alternative to trusts for wealth transfer, particularly following the UK's April 2025 inheritance tax changes. This structure provides tax-efficient gifting opportunities while introducing younger generations to wealth stewardship, though careful planning is required to navigate cross-border tax implications and US estate tax restrictions.

HMRC has launched a consultation proposing fundamental reform to the UK's distribution framework, potentially one of the most consequential tax law consultations in decades. The proposals aim to modernize rules that have remained largely unchanged since 1965, addressing how payments from companies to shareholders are taxed and closing perceived loopholes that allow value extraction at capital gains rates rather than dividend rates. The consultation covers seven key areas including reductions of capital, dem

Changes to UK inheritance tax rules from April 2025 have diminished the appeal of traditional trust planning for non-UK families relocating to Britain. While Americans benefit from favorable US-UK estate tax treaty provisions, family limited partnerships emerge as an increasingly attractive alternative structure, particularly for American families navigating cross-border wealth transfer challenges.

The Upper Tribunal's decision in Putney Power Limited clarifies a critical question in UK tax law: when does a company actually begin trading versus merely preparing to trade? This distinction carries significant consequences for Enterprise Investment Scheme relief and other tax benefits, as the court rejected rigid legal tests in favor of a nuanced, fact-specific analysis of each company's activities and circumstances.

Private UK real estate investment trusts have surged in popularity since 2022 legislative changes, offering private equity real estate managers a tax-efficient vehicle for UK property investments.

The UK remains a respected and effective jurisdiction for company formation and management. Its established legal framework, tax treaty network and transparent regulatory environment, continue to support a wide range of trading, holding, and international group structures.

Autumn Statement kept CGT and IHT unchanged, but APR/BPR relief rises in 2026. A timely moment for Estate, Will and Succession Planning reviews.

Among the array of changes introduced in the Autumn Budget was a development in the relief available when selling a business to an Employee Ownership Trust (EOT).

From 6 April 2026, carried interest arising to affected UK taxpayers will generally be taxed within the income tax regime as profits of a deemed trade.