In the lead up to the 2024 Autumn Budget there was much speculation about the potential Capital Gains Tax increase and changes to Business Asset Disposal Relief.
In the Autumn Budget 2024, The Chancellor announced changes to Capital Gains Tax (CGT), Business Asset Disposal Relief and Investors’ Relief that will affect individuals’ tax liability when they dispose of assets.
In this blog, we take a look at what the new CGT rules are and some areas of focus for business owners, property investors and landlords. But let’s start with the basics.
Capital Gains Tax is a UK tax that is applied to the profit when you sell or ‘dispose of’ something (i.e. ‘an asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.
You do not pay Capital Gains Tax on all assets; some assets are tax-free. You also do not have to pay Capital Gains Tax if your gains in a year are under your tax-free allowance.
Every individual can be liable to pay Capital Gains Tax. However, this depends on what you are selling, the amount of gain you make on the sale or disposal of the asset and whether you can use any of the main tax reliefs available.
You will pay Capital Gains Tax when you sell or dispose of the following:
Every individual qualifies for a Capital Gains tax-free allowance (called the annual exempt amount). This Capital Gains Annual Allowance is £3,000 for assets and £1,500 for trusts.
Your home (main residence) is exempt from Capital Gains Tax if it has been your only or main home throughout the entire period of ownership.
If youve made gains on investments in an Enterprise Investment Scheme (EIS) will be free from CGT if held for three or more years.
Other assets that you should not pay CGT on are:
You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount).
The Capital Gains tax-free allowance is:
There are some important tax reliefs to consider when calculating Capital Gains Tax. These reliefs may be available to you and may significantly reduce your CGT liability.
The reliefs available are:
The qualifying conditions can be complex for these reliefs, so seek advice from specialist Capital Gains Tax advisors such as dns accountants.
As part of the Autumn Budget 2024, Chancellor Rachel Reeves and the Labour government announced some significant changes to the rates and rules for Capital Gains Tax. Some of these changes take effect immediately, whilst others are being phased in gradually.
These changes are summarised below:
Anti-forestalling rules have also been proposed under the new draft legislation. These are likely to apply to unconditional contracts entered into before 30 October 2024 that were not completed before that date. These contracts will be subject to the new rates of CGT unless:
From 6 April 2025, the CGT rate that applies to BADR and Investors’ Relief will rise from 10% to 14%.
From 6 April 2026, this rate will further increase to 18%.
The Chancellor also announced increases in the CGT rates which apply to carried interest.
From April 2026, all carried interest (which is mainly held by individuals engaged in private equity and hedge fund businesses) will be taxed within the income tax rates framework and subject to class 4 NICs.
A multiplier of 72.5% is expected to be applied to qualifying carried interest that falls within the tax charge.
The current two CGT rates for carried interest will both increase to 32% from 6 April 2025 as an interim step. There will be further consultation on this area in the future.
The government announced reform of business relief (formerly business property relief) and agricultural property relief. From April 2026, the first £1m of combined business and agricultural assets will continue to be eligible for the existing 100% relief. However, assets over £1 million and shares listed on AIM and similar markets will only be eligible for 50% relief, with an effective rate of inheritance tax at 20%.
Annual tax on enveloped dwellings (ATED) The ATED annual charge will rise by 1.7% from 1 April 2025 in line with CPI. For ATED filing and payment purposes in 2025/26, a property revaluation as at 1 April 2022 is required (or the date of acquisition for a property acquired after that date).
More than £500,000 but not over £1 million £4,450 £4,400
More than £1 million but not over £2 million £9,150 £9,000
More than £2 million but not over £5 million £31,050 £30,550
More than £5 million but not over £10 million £72,700 £71,500
More than £10 million but not over £20 million £145,950 £143,550
More than £20 million £292,350 £287,500
Get in touch
With all the changes announced in the 2024 Autumn Budget, now is the time to revisit your tax planning for 2025/26 to ensure you minimise your tax liabilities and maximise your tax savings. Contact our tax team today on 0330 088 6686. or you can also e-mail us at enquiry@dnsaccountants.co.uk.
For more information on other changes in the Autumn Budget 2024 such as Employers National Insurance, Employment allowance, Income tax, Inheritance tax, Pensions, Stamp Duty Land Tax and Non UK domiciled individuals, read our Autumn Budget 2024 blog.
Any questions? Schedule a call with one of our experts.
Siddharth Agarwal I am a Chartered Tax Advisor (OMB) and ACCA. I have 9+ years of experience in owner-managed business taxation issues, company reorganisations, property taxation, and succession planning. I also work with private clients on bespoke tax planning strategies for trusts, residence status, and non-residents. I aim to fulfil my professional duties towards my clients and keep them satisfied, my utmost priority. I believe in establishing and maintaining businesses and personal relationships as the key to mutual growth.
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