Capital Gains Tax Changes - Autumn Budget 2024
Posted on 7th November 2024 at 14:11
On 30 October 2024, new increases to the Capital Gains Tax (CGT) rates came into effect, likely prompting a surge in asset sales and a significant boost in tax revenues. Despite the importance of these changes, less than 1% of UK adults contribute to CGT, and only £572 million was collected last quarter.
Under the new rules, the lower CGT rate has been raised from 10% to 18%, while the higher rate has increased from 20% to 24%. This marks the first substantial change to CGT rates since 2016, when the top rate was reduced from 28% to 18%.
Business Asset Disposal Relief (BADR) and Investors’ Relief will also rise, matching the lower CGT rate gradually. These reliefs will increase to 14% in April 2025 and then to 18% by April 2026.
The Treasury estimates this CGT increase will raise an additional £90 million by the end of this year, with projected revenues reaching £1.44 billion in 2025. The revenue is expected to gradually decline to £1.35 billion by 2027/28 before rising to £2.49 billion in 2029/30, totalling an anticipated £9.9 billion increase over five years.
It’s worth noting that CGT rates for residential property sales, now at 18% and 24%, will remain unchanged. Additionally, new rules will address forestalling arrangements, targeting incomplete contracts signed before 30 October 2024. For BADR and Investors’ Relief, contracts signed between 30 October 2024 and 5 April 2026 and completed after 6 April 2025 will be subject to these adjusted rules.
Approximately 264,000 people will be impacted by the CGT rise in 2025/26. Taxpayers with CGT liabilities for this financial year will need to assess gains made before and after 30 October 2024 to ensure accurate tax reporting. Moreover, HMRC must update its IT systems to reflect the new rates, with an estimated cost of £600,000.
If you need help reviewing these new Capital Gains Tax updates, get in contact with us below today!
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Tagged as: Capital Gains Tax
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