Whilst the Budget didn’t include as many radical changes to Capital Gains Tax (CGT) as originally anticipated, there are still a few changes that were made which are of particular importance.
Rates of CGT
The Budget affects the sale of non-residential property for basic rate taxpayers the most, with increases to the basic rate from 10% to 18% with effect from 30 October 2024.
Higher rate taxpayers, as well as Trustees and Personal Representatives, will also see a small increase in their CGT liability, as the higher rate also increased from 20% to 24%.
Different rules apply to carried interest.
The rate of CGT that applies to Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) is increasing in stages:
- Remaining at 10% for disposals made on or before 5 April 2025
- 14% for disposals made on or after 6 April 2025
- 18% for disposals made on or after 6 April 2026
The rates for residential property remained at 18% and 24%.
Allowances
The CGT annual allowances were unchanged which remain at £3,000 per individual and £1,500 for Trusts.
Lifetime Limits
It was also announced that the CGT lifetime limit applying to qualifying disposals on or after 30 October 2024 for IR would reduce from £10 million to £1 million, to align with BADR.
Anti-forestalling measures
There are special provisions for contracts entered into before 30 October 2024 but completed after that date for the main rate changes, and for contracts entered into on or after 30 October 2024 for the phased rate change that applies to BADR and IR.
There are also special provisions for share reorganisations and exchanges where an election is made.
Both measures mean that the new, higher, rates would apply to the disposal. If you may be impacted then it is vital you take advice.
If you want to discuss how the Budget changes will impact you, do get in touch.
