What Changed?
In the Autumn Budget on 30 October 2024, Chancellor Rachel Reeves announced immediate increases to Capital Gains Tax (CGT) rates. The changes took effect from the very same day.
New CGT Rates (From 30 October 2024)
| Asset Type | Basic Rate Taxpayer | Higher/Additional Rate |
|---|---|---|
| Most assets (shares, investments, business assets) | 18% (was 10%) | 24% (was 20%) |
| Residential property | 18% (unchanged) | 24% (unchanged) |
| Business Asset Disposal Relief | 14% from April 2025 (was 10%) | 18% from April 2026 |
Annual Exempt Amount
The CGT Annual Exempt Amount remains at £3,000 for 2025/26 (dramatically reduced from £12,300 in 2022/23). This means only the first £3,000 of gains each tax year is free from CGT.
Who Is Affected?
Investors Selling Shares
If you sell shares outside of an ISA, CGT now applies at 18% or 24% on gains above £3,000. Using your annual ISA allowance (£20,000) to shelter investments is more important than ever.
Business Owners Selling Their Business
Business Asset Disposal Relief (formerly Entrepreneurs' Relief) still provides a lower rate on the first £1 million of qualifying gains, but the rate is rising from 10% to 14% in April 2025 and 18% in April 2026. If you are planning to sell, timing matters significantly.
Landlords Selling Property
Residential property CGT rates were unchanged at 18%/24%, so the direct impact on landlords selling property is limited. However, the reduction in the annual exempt amount continues to increase their tax bills.
Trustees and Personal Representatives
Trustees pay CGT at 24% on all gains (same as higher rate taxpayers). No change from the Budget.
Planning Opportunities
- Bed and ISA — Sell investments and rebuy within an ISA to shelter future gains (note: gains on the sale itself may be taxable)
- Spouse transfers — Assets can be transferred between spouses with no CGT, allowing use of both annual exempt amounts and lower rate bands
- Loss harvesting — Realise losses to offset gains in the same tax year
- Timing of disposals — Consider whether to sell before or after 5 April to optimise which tax year the gain falls into
- Business exit planning — If selling your business, act before Business Asset Disposal Relief rates increase further
Reporting CGT
For residential property, you must report and pay CGT within 60 days of completion. For other assets, CGT is reported via your Self Assessment tax return, due by 31 January following the end of the tax year.
Need Advice?
CGT planning can make a significant difference to the amount of tax you pay. Contact Ascot Accountancy for personalised CGT planning advice before making any significant disposals.