Autumn Budget 2024: CGT Rates Rise

What are the CGT changes? 

Chancellor Rachel Reeves announced in the Autumn Budget on October 30 that the main rates of capital gains tax (CGT) would be increasing with immediate effect. 

The higher rate of CGT increased to 24% from 20%, and the lower rate rose to 18% from 10%. The rates of CGT that apply to residential property disposals remain unchanged. 

The government said the changes would raise revenue while ensuring that the UK tax system remained “internationally competitive.” 

Despite the higher rates, Reeves noted in her Budget speech that the UK would still have the “lowest rates of CGT in any European G7 economy”. The UK’s closest European neighbours, Ireland and France, have CGT rates of 33% and 34% respectively.  

Alongside the changes to the headline rates of CGT, the Chancellor maintained the lifetime limit for business asset disposal relief (BADR) at £1 million to “encourage entrepreneurs to invest in their businesses.” Any gains from disposals that qualify that for BADR will be taxed at a rate of 10% this tax year, 14% from April 2025, and 18% from April 2026. 

How much revenue will it raise? 

According estimates laid out in the Budget Report, the rate increases, paired with the changes to BADR, will raise £90 million in revenue this tax year. In 2025/26, the government expects to raise £1.44 billion and £1.37 billion in 2026/27. The government noted that these figures have certified by the Office for Budget Responsibility. 

369,000 people paid £14.4 billion in capital gains tax (CGT) in 2022-23, according to HMRC. This represented an 8% decrease in the number of taxpayers and a 15% decrease in the total liability against the previous tax year. 41% of the CGT receipts came from those who made gains of £5 million or more. 

HMRC estimate that 264,000 individuals will pay more CGT in 2025/26 because of the rate increases. 

How is FSL responding? 

Our team is currently working hard to respond to these changes and will provide a detailed response in due course. In the meantime, CGiX customers can be reassured that this is not the first time that FSL has had to respond swiftly to mid-year CGT changes and so can expect no disruption to their service.

If you have any questions about the Budget, please contact: info@financialsoftware.co.uk