Capital Gains Tax

Capital Gains Tax (CGT) can be complex due to its varied rules, reliefs, and tax rates. Generally, CGT is incurred when you sell or give away assets that have increased in value since their acquisition.

Following the Autumn Budget announcement on 30 October 2024, which introduced both immediate and upcoming CGT changes (pending the final Finance Bill), the current main CGT rates are 18% and 24%, depending on your income within the tax year.

Every individual in the UK has a personal Annual Exemption of £3,000, which means the first £3,000 of gains in a tax year are exempt from CGT. Any CGT liability owed is usually due by 31 January following the end of the tax year in which the gain was realized. For instance, a capital gain made on 5th October 2024 would be reported on your 2024/25 tax return, with payment due by 31 January 2026.

Disposals of UK Residential Property

While UK residential property disposals are subject to the same CGT rates, they have unique reporting requirements. Any such disposals must be reported to HMRC within 60 days of completion, along with any estimated CGT due. This timeline can pass quickly due to the process of setting up an HMRC government gateway account and authorizing an agent if needed.

Our Tax Team has extensive expertise and streamlined processes to ensure your gains are reported within the 60-day window. We also diligently identify any qualifying costs that could reduce your CGT liability.

Business Asset Disposal Relief (BADR)

Business Asset Disposal Relief (BADR) provides a beneficial rate for qualifying disposals. The first £1 million of gains on qualifying shares in trading entities is currently taxed at 10%. As confirmed in the Autumn Budget, this allowance will remain in place; however, from 6 April 2025, the rate will increase to 14% on the first £1 million of gains and will rise again to 18% from 6 April 2026.

Any gains exceeding the £1 million threshold will be taxed at the higher CGT rate of 24%.

Eligibility for BADR is subject to stringent criteria, so it’s important to confirm whether your shares qualify. Our team can assess your situation and explore planning strategies to optimize your tax efficiency ahead of a potential business sale.

Can you help with my CGT return?

Absolutely. For more information or assistance with your CGT planning, please reach out to our Tax Team through our Contact Us page. We’re here to ensure compliance and maximize all available reliefs.