CGT: WHAT CHANGED FOR SHARE EXCHANGES AND REORGANISATIONS AT BUDGET 2025
December 2, 2025
What Returning UK Residents Need to Know About Dividend Tax from Abroad
Introduction
The 2025 Budget introduced significant changes to how the UK treats “paper-for-paper” transfers: share exchanges and company reorganisations. Previously, many of these transactions could benefit from rollover relief under the reorganisation rules in TCGA, allowing shareholders to swap or reorganise share capital without triggering an immediate Capital Gains Tax (CGT) charge. From 26 November 2025, however, the government has expanded the anti-avoidance carve-outs so that such rollover relief may be denied where the main purpose of the exchange or reorganisation is (or includes) securing a tax advantage. For shareholders, founder-owners, corporate groups and advisers, that means greater risk, tighter scrutiny, and a need for more robust commercial substance when planning share-for-share exchanges and reconstructions.
What’s changing - the new anti-avoidance regime
According to the government’s published note:
- The revised anti-avoidance provisions apply to any issue of shares or debentures on or after 26 November 2025.
- Under the old regime (TCGA sections 127–139), share exchanges and share capital reorganisations qualified for CGT rollover relief (no immediate gain) so long as conditions were met and no avoidance motive was identified.
- Under the new rules, HMRC may deny rollover relief where the transaction (or any part of it) has as its main purpose, or one of its main purposes, obtaining a tax advantage.
- If relief is denied, the transaction is treated as a disposal at market value (or relevant disposal value), meaning CGT (or corporation tax, where applicable) becomes immediately due.
- The government’s stated aim is to strengthen trust in the tax system and prevent “arrangements whose main or one of the main purposes is to secure a tax advantage” from abusing the reorganisation reliefs.
Importantly: if a clearance application under the old-law procedure (e.g. s.138 clearance) was submitted to HMRC before 26 November 2025, and the relevant shares/debentures issued within the transitional window (60 days), then the pre-existing (old) anti-avoidance regime continues to apply.
Who will be affected?
This change potentially impacts a wide variety of taxpayers and companies, including:
- Founders and shareholders carrying out share-for-share exchanges (for example, to adjust shareholdings, reorganise group structure, or facilitate investment)
- Groups carrying out corporate reorganisations or reconstructions, including transfers within holding structures, merger-type reorganisations, or share-for-debt swaps
- Owner-managed businesses and private-equity backed companies that frequently restructure for commercial or financing reasons
- Trustees, beneficiaries, and advisers involved in company restructurings, share plans, or group reorganisations under rollover relief
Some other takeaways / concerns
- The change turns rollover relief into a substance-over-form test: transactions will now need genuine commercial purpose and structure, not merely formal compliance, if rollover is to survive.
- For companies considering restructuring via share exchanges or reorganisations, simply meeting the old statutory tests will likely no longer suffice.
- The removal of the old de minimis “notional avoidance” threshold (under the old anti-avoidance rule, small-shareholders might have escaped denial) means even minor or minority stakeholders may lose rollover relief if the overall scheme is caught.
- For private equity, mid-market deals, family groups and restructurings,
- compliance burden and risk of surprise tax liabilities have increased, which may dampen some transactions or at least re-shape structuring decisions.
Practical Planning Implications - What You Should Be Doing
Given the change, here are important practical and planning points for you (or your clients) to consider:
- Reassess planned share exchanges or reorganisations scheduled for 2026/2027 onward: Make sure they satisfy the new provisions.
- Document commercial purpose carefully: board minutes, internal business rationale, strategy papers, financing or operational logic (not just tax), to evidence “main purpose” other than tax.
- Review shareholder structures: small shareholders or minority stakeholders need to be aware that, even if individually they hold only a small stake, rollover can be denied if the wider group or transaction is regarded as tax-avoidance.
- Update advice letters, engagement terms and “deal checklists”: advisers should alert clients to the revised CGT risk and include commercial rationale documentation as standard.
Conclusion
The modernisation of the anti-avoidance provisions applying to share exchanges and reorganisations marks a significant tightening of the CGT regime. What was frequently a tax-neutral and administratively convenient route to reorganise share capital may now carry additional CGT risk, unless robust commercial substance can be demonstrated.
If you or your clients have any planned reorganisations, share exchanges or restructuring in the near future and would like to run through the likely CGT implications under the new regime, do feel free to get in touch via our contact page below.
Introduction More wealthy UK residents are exploring life overseas ahead of the 2026/27 tax year. Higher UK taxes, political uncertainty and a desire for a different way of living are all pushing people to look at alternatives. Four destinations stand out for high-net-worth UK individuals as at late 2025: 1. United Arab Emirates (Dubai) 2. Portugal 3. Switzerland 4. Malta Each offers a different blend of tax advantages, residency options and lifestyle. United Arab Emirates (Dubai) - Dubai is now the default choice for many UK entrepreneurs and professionals. Tax For individuals, there is currently no personal income tax on salaries, bonuses or most investment income, and no local capital gains or inheritance tax regime for individuals. There is VAT and a developing corporate tax regime, but personal tax remains far lighter than in the UK. The UK–UAE double tax treaty helps reduce the risk of the same income being taxed twice and needs to be considered alongside UK residence rules. Residency Common routes for UK nationals include: Employer- or company-sponsored residence visas Remote-worker visas for those employed or self-employed abroad Long-term “golden” style visas linked to investment, property or professional status Retirement options for over-55s. (All require private health insurance and periodic renewal.) Lifestyle Dubai offers a high standard of living, excellent connectivity and a large, well-established British community. Housing and schooling are expensive and the lifestyle can encourage overspending, but for many the tax position and opportunity outweigh the costs. Best for: Maximising net income and building or scaling a business in a dynamic, international city. Portugal - Portugal appeals to those who want EU residency, a milder climate and a slower pace of life. Tax The old NHR regime has closed to new applicants and been replaced by a newer incentive framework (often referred to as IFICI) aimed at certain professionals and activities. The UK–Portugal tax treaty reduces double taxation, and Portugal does not operate a classic wealth tax, though property-related charges can apply. (It's signed and ratified but not yet fully in force as of early 2026, which may slightly affect immediate tax planning). Residency Post-Brexit, common routes for UK nationals include: D7 visa – for those with sufficient passive income (pensions, investments, rentals). D8 / Digital Nomad visa – for remote workers with qualifying income from abroad. Work and other residence visas tied to employment or specific skills. These can lead to long-term residence and, ultimately, citizenship if physical presence and integration tests are met. Lifestyle Cost of living is generally below the UK (though higher in central Lisbon and the Algarve), English is widely spoken in cities, and the public and private healthcare systems are well regarded. There are large British and wider international communities. Best for: Those wanting EU residence, good quality of life and a balance of tax and lifestyle advantages. Switzerland - Switzerland attracts UK families who prioritise security, discretion and top-tier services. Tax Tax is set at federal, cantonal and communal level, so overall rates vary widely by canton. Well-chosen cantons can be very competitive for both individuals and companies. Private capital gains are not generally taxed, but there is an annual wealth tax on net assets, with rules depending on location. For suitable non-working individuals, some cantons still offer lump-sum (forfait) taxation, where tax is based on living costs rather than worldwide income, subject to minimum levels and conditions. Residency As non-EU nationals, UK citizens use: B permits – time-limited residence, often linked to work L permits – short-term residence for specific assignments C permits – longer-term settlement after sustained residence and integration Wealthy retirees and non-working individuals may be able to obtain residence based on financial self-sufficiency and, in some cantons, lump-sum taxation. Lifestyle High costs are offset by excellent infrastructure, schools and healthcare (with compulsory private health insurance). International communities are strong in Zurich, Geneva and other cities, though social life can feel more formal than Southern Europe. Best for: Those seeking stability, discretion and first-class public services and education, rather than the lowest day-to-day costs. Malta - Malta is a compact EU state with a very familiar feel for UK nationals: English is an official language and the legal and business environment is comfortable for British professionals. Tax Malta’s tax system and UK–Malta treaty can be particularly attractive where you hold significant foreign-source income. Under the Global Residence Programme, qualifying individuals can pay a favourable flat rate on foreign income remitted to Malta, while foreign capital gains kept offshore are generally not taxed in Malta. There is no separate wealth tax and no classic inheritance tax, though duties may apply to certain Maltese assets. The separate “golden passport” (citizenship by investment) route has been struck down by the EU’s top court, but residence programmes remain available. Residency Options for UK citizens include: Employer-sponsored Single Permits combining work and residence The Global Residence Programme for financially self-sufficient individuals meeting property and minimum tax thresholds Digital-nomad-style visas for remote workers Long-term residence after several years of compliant stay Lifestyle Costs (especially rent and property) are typically lower than in the UK outside the most fashionable areas. English is widely used in government and business, healthcare is solid, and London is only a short flight away. Best for: Those wanting an English-speaking EU base with favourable treatment of foreign-source income and a tight-knit expat community. How to decide & next steps - All four countries can work extremely well for UK high-net-worth individuals, but for different profiles: Choose Dubai if your priority is low personal tax on active income and you are comfortable with a high-energy city. Choose Portugal if EU residency, climate and lifestyle matter as much as tax. Choose Switzerland if stability, education and healthcare are at the top of your list. Choose Malta if you want an English-speaking EU base with flexible options for foreign income. The right answer depends on your overall wealth, income mix, family plans and how tied you remain to the UK. If you would like bespoke, confidential advice on whether remaining UK-resident or relocating to Dubai, Portugal, Switzerland or Malta is the better strategy for your situation, you are welcome to get in touch to explore your options in detail.
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