How the Autumn Budget Impacts Capital Gains Tax (CGT)

The recent Autumn Budget has introduced notable adjustments to Capital Gains Tax (CGT) rates, set to affect taxpayers for the current tax year and beyond. These changes may have significant financial implications, especially for property investors and landlords, as they prepare for their tax liabilities by January 2026.

Changes to Capital Gains Tax Rates

Before the Autumn Budget, the CGT rates were relatively low, with the lower rate at 10% and the higher rate at 20%. However, starting from October 30, 2024, these rates have seen substantial increases. The lower CGT rate has risen to 18%, and the higher rate is now set at 24%.

For individuals, this increase translates to a greater tax burden on capital gains made from the sale of assets. Those planning to dispose of investments should carefully evaluate the impact of these rate hikes on their financial strategies.

CGT Rates for Residential Property Owners

Fortunately, landlords holding residential property portfolios in their personal names will not see further rate increases specifically for property-related gains. The rates for residential property sales remain at 18% for the lower rate and 24% for the higher rate. This consistency provides some relief for individual landlords facing increased tax rates on other asset disposals.

However, these rates can still impact landlords who operate through different structures. If you hold investment properties within a limited company or a special purpose vehicle, CGT rules differ. When you sell a property directly from a company, it is subject to corporation tax (currently between 19% and 25%), which remains unchanged by the budget. But, if you sell shares in the company itself, these are now subject to the newly increased CGT rates.

Previously, gains from selling company shares were taxed at 10% or 20%. Starting from October 30, 2024, however, these transactions will now incur the updated CGT rates of 18% and 24%, potentially increasing the tax burden on company-based property investments.

Annual CGT Allowance and Relief Options

There is no change to the annual CGT allowance following the Autumn Budget, which had already been reduced from £6,000 in 2023/24 to £3,000 in 2024/25. This lower threshold limits the amount of tax-free gains available to investors and property owners, placing further pressure on those looking to manage their tax liabilities.

Despite this, certain reliefs remain available that could reduce your CGT liability:

• Private Residence Relief: Allows homeowners to reduce the CGT on their main residence.
• Business Asset Disposal Relief: Enables qualifying business owners to pay a reduced CGT rate on the disposal of business assets, with a lifetime limit that remains at £1,000,000 following the budget.

Both of these options provide some relief against CGT, depending on individual circumstances, and could be especially valuable in light of the recent rate hikes.

Next Steps: Assessing Your Position

If you are a property investor or business owner impacted by the recent CGT changes, it’s crucial to assess your financial strategies accordingly. The higher CGT rates may require restructuring investments or seeking professional advice on tax-efficient disposal options.

---

Please get in touch on 01273 441187 or book a discovery call with one of our expert accountants. 
Contact

You May Also Like…

• ❮ Previous
• Next ❯