CGT changes at a glance: what investors need to know about the new rules

"The UK's capital gains tax (CGT) system underwent significant changes in October 2024, following the Chancellor Rachel Reeves' Autumn Budget. The adjustments affect everyone from casual investors to landlords, entrepreneurs, and those disposing of crypto assets - and, crucially, HMRC's outdated self-assessment software has not kept up with the mid-year changes. For anyone filing a 2024-25 return, here is a comprehensive guide to the new rules, the key numbers, and what it means for your finances."

"That means fewer gains can be realised tax-free and many more individuals - particularly those disposing of second homes, buy-to-let properties, or large share portfolios - will now fall into the CGT net. The cut is especially impactful for first-time CGT payers. According to the Institute of Chartered Accountants in England and Wales (ICAEW), many taxpayers are unfamiliar with the complexity of CGT reporting and may struggle with the timing issues created by the mid-year rate change."

"The result is a much steeper tax bill for anyone realising gains after October 2024. For example, a higher-rate investor who made a £50,000 gain on shares in September 2024 would owe £10,000 in CGT under the old rules. The same gain realised in November would attract £12,000 in tax. HMRC applies strict interest and penalty regimes where tax is underpaid or reported incorrectly. This is why advisers are warning that anyone filing their own return should be especially vigilant this year."

The UK's capital gains tax system changed on 30 October 2024 following the Autumn Budget. CGT rates increased substantially for disposals after that date, leading to higher tax bills for investors, landlords, entrepreneurs, and crypto holders. The annual CGT exemption was reduced from £6,000 to £3,000 for 2024-25, bringing more disposals into the CGT net. HMRC's self-assessment software has not been updated to reflect the mid-year changes, creating timing and reporting difficulties. Strict interest and penalty regimes apply for underpaid or incorrectly reported tax. Advisers warn that taxpayers filing their own returns should exercise particular vigilance.

Read at Business Matters