HMRC Encourages Founders to Submit Self Assessment Tax Returns as Soon as Possible 

Business founders are being encouraged by HMRC to submit their Self Assessment tax returns as soon as possible if they’re applying to pay tax in instalments. Keep reading to discover more. 

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Changes in the Autumn 2025 Budget saw Capital Gains Tax relief (CGT) for sales to Employee Ownership Trusts (EOTs) reduce to 50%. However, this still positions employee ownership as an attractive option for business owners considering succession.   

The eoa is working closely with HMRC to clarify the procedural implications of this change, including requesting updated formal guidance in HMRC’s online Manuals, which will follow later in the year. 

A key concern has been whether CGT can be paid in instalments. Employee ownership transitions commonly see exiting founders receiving payment from the EOT over a number of years (known as deferred consideration).  

HMRC has confirmed an existing provision in legislation can apply in these circumstances to allow Capital Gains Tax charges to be paid in instalments under section 280 Taxation of Chargeable Gains Tax Act 1992. See HMRC’s statement on this here.  

Requesting Payment in Instalments 

Founders must write to HMRC to make a section 280 claim and do this separately from claiming EOT Capital Gains Tax relief in their Self Assessment tax return. 

In discussion with HMRC, owners who have sold their business to an EOT since the Capital Gains Tax changes came into force are encouraged to submit their Self Assessment tax returns as soon as possible, if they’re applying to pay tax in instalments. 

HMRC aims to process applications to pay tax by instalments - and respond to the taxpayer - within fifteen working days of receipt of the application (though this could take longer during busy times). 

In response to a question from the eoa’s International Ambassador, Graeme Nuttall, about the timing of dealing with section 280 claims, HMRC replied: 

“Whilst customers may submit applications to pay tax by instalments at any time after the date of the relevant disposal, in practice HMRC will process the application and set up the applicable instalment payment dates on the customer’s Self Assessment  account once the SA tax return for the year of disposal has been received. 

“For this reason, HMRC encourages customers seeking to make section 280 applications to submit their Self Assessment tax return as soon as possible, from 6 April 2026 

“Applications to pay tax by instalments under section 280 should not be made within the Self Assessment tax return itself, but in writing to HMRC’s Capital Gains Tax Queries postal address.  

“Disposals to EOTs qualifying for relief under section 236H of the Taxation of Chargeable Gains Act 1992 were exempt from CGT prior to 26 November 2025. Section 280 is therefore only relevant to disposals to the trustees of an EOT that took place on or after 26 November 2025, within the tax year 2025/26. 

“SA tax returns for 2025/26 year can be submitted to HMRC from 6 April 2026 onwards.” 

Therefore, anyone selling to an EOT who wishes to pay capital gains tax in instalments is encouraged to submit their tax return as soon as possible after 6 April 2026. 

Template Letter to Request Payment in Instalments 

Graeme asked HMRC to approve a template letter for a section 280 claim. HMRC was unable to give formal approval to a third-party template, but it confirmed the letter covers all required information and is therefore an acceptable format to submit section 280 requests following disposal to an EOT to HMRC.   

The template isn’t a substitute for detailed advice on specific transactions and should not be taken as providing advice on the topics it covers. 

eoa Supporter members can access the template letter in the eo Hub. 

If you’re not an eoa member, you can request a copy of the template letter by emailing [email protected]