In the last blog of the series, we look at changes to Capital Gains Tax (CGT) announced in the Autumn Budget on 30 October 2024.
Overview
Chancellor Rachel Reeves announced several changes to CGT, including:
- The rate of CGT for basic rate taxpayers increased from 10% to 18%, and for higher rate taxpayers it increased from 20% to 24%, effective from 30 October 2024.
- The CGT rate for Business Asset Disposal Relief (BADR) will increase from 10% to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026.
- The CGT rate for Investors’ Relief will also increase in line with the BADR rates, however the lifetime limit for the relief will decrease from £10 million to £1 million for disposals made on or after 30 October 2024.
Implications
The increased CGT rates, in conjunction with the previous government’s reduction of the annual exemption from £6,000 to £3,000, will mean investors and individuals who dispose of assets will face higher tax liabilities on the gains made. This could discourage the sale of assets and influence decisions regarding business investments and disposals.
Steps to consider
The changes to CGT may mean a need to reassess disposals of assets that have increased in value. There are steps you can consider to manage your CGT liability, including:
- Timing of disposals: By strategically timing asset disposal, investors and individuals could maximise annual CGT exemptions.
- Spousal transfers: Spousal transfers allow married couples to distribute assets to take advantage of each partner’s annual exemption and can help spread the tax burden.
- Review property portfolios: People with high-value homes could reassess whether their property portfolios align with their estate planning strategy.
If you would like to discuss changes to CGT, and how they may impact your estate planning strategy or investment portfolio, please contact our Private Client team on 01638 560556. Alternatively, you can email a member of the team directly at mike.lambert@edmondsonhall.com or stephen.roberts@edmondsonhall.com.
This blog is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
