Capital Gains Tax (CGT) is a tax on the profit you make when you sell or dispose of an asset that has increased in value, not on the total sale proceeds. For UK agency founders, CGT typically applies when you sell your agency shares, your agency's business assets (like goodwill or equipment), or personal investments such as a second property. The key figure is the gain: your sale price minus what you originally paid for the asset, less any allowable costs like legal fees or improvements.
As an agency founder, the most common CGT event is selling your company shares. If you qualify for Business Asset Disposal Relief (formerly Entrepreneurs' Relief), you pay a reduced rate of 14% on gains up to your lifetime limit of £1 million for the 2025/26 tax year. This rate rises to 18% from 6 April 2026, so if you are considering a sale, timing matters. Without relief, gains from selling your agency shares are taxed at 20% (for higher-rate taxpayers) or 10% (for basic-rate taxpayers, to the extent the gain falls within the basic-rate band).
You also have an annual exempt amount: for 2025/26, the first £3,000 of gains in a tax year are tax-free. This is down from £6,000 in 2023/24, so it is now much easier to exceed. If you sell agency equipment or a client list, any gain above that allowance is taxable. Losses can be offset against gains in the same year or carried forward, but you must report them to HMRC within four years of the end of the tax year.
For agency founders who hold personal assets like a buy-to-let property or shares in other companies, the residential property rate is 18% for basic-rate taxpayers and 24% for higher-rate taxpayers (2025/26). This is separate from your agency's trading assets. You must report and pay CGT within 60 days of completing a property sale using HMRC's real-time service.
When this matters for agency founders: When you sell your agency, transfer shares, or dispose of significant business assets, CGT planning can save tens of thousands. The reduced BADR rate, the timing of the rate rise in April 2026, and your annual allowance all directly affect your net proceeds. Always calculate your gain carefully and consider professional advice before any sale.