Capital Gains Tax is increasing – What does this mean for you?

Capital Gains Tax (CGT) was a significant target for the Chancellor in the Autumn Budget – with an immediate rise put in place for both the basic and higher rate of CGT.

The basic rate paid by basic rate taxpayers rose immediately to 18 per cent – up from 10 per cent.

Meanwhile, the higher rate has risen to 24 per cent from 20 per cent.

The existing rates of CGT for residential property sales remain unchanged.

This means that you will see a rise in the tax you pay on qualifying gains when you sell most assets – including business shares.

What about business reliefs?

Business owners who sell their businesses have typically benefitted from Business Asset Disposal Relief (BADR) – formerly known as Entrepreneurs’ Relief – allowing you to pay CGT at a rate of 10 per cent on qualifying gains regardless of the individuals ‘marginal rate of tax.

The Budget left BADR in place for now, but the relief provided will be reduced when rates rise from 10 per cent to 14 per cent in April 2025, and to 18 per cent in April 2026.

Can I plan around CGT increases?

The Chancellor introduced the changes to CGT rates with immediate effect, giving people little time to plan if they wish to sell personal assets.

However, those business owners considering an exit may want to bring their business sale forward to take advantage of better BADR rates.

We recommend that you speak to an experienced accountant before beginning the sales process.

Looking to accelerate the sale or disposal of a business? Speak to our experienced team today.