Capital gains tax changes

A summary of the key changes, including new rates from October 2024, April 2025 and April 2026

Effective 30 October 2024:

  • The main rates of capital gains tax (CGT) for assets other than residential property and carried interest will increase from 10% and 20% to 18% and 24%, respectively
  • The rate for trustees and personal representatives will rise from 20% to 24%
  • The existing 18% and 24% rates that apply to residential property will remain unchanged.

Effective 6 April 2025:

  • The rate for Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14%.

Effective 6 April 2026:

  • The rate for Business Asset Disposal Relief and Investors’ Relief will further increase from 14% to 18%.

Legislation will be introduced in Finance Bill 2024/25 to increase:

  • The 10% rate for basic rate taxpayers to 18% for disposals made on or after 30 October 2024.
  • The 20% rate for higher rate taxpayers to 24% for disposals made on or after 30 October 2024.
  • The 20% rate of CGT that applies to gains accruing to trustees and personal representatives to 24% for disposals made on or after 30 October 2024.
  • The 10% rate that applies to Business Asset Disposal Relief and Investors’ Relief 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 existing 18% and 24% rates that apply to residential property will remain unchanged. This measure means that it will no longer be necessary to specify separate rates for this purpose.  

The existing provisions under which losses, the annual exempt amount and any unused income tax basic rate band can be used in the most beneficial way will remain in place, with amendments to reflect the changed rates.

CGT that may be due on the disposal of an interest in UK residential property will continue to be payable within 60 days of the completion of the disposal. 

Rules will also be introduced that apply to forestalling arrangements entered into in respect of unconditional but uncompleted contracts before 30 October 2024, and for Business Asset Disposal Relief and Investors’ Relief, where a contract is made from 30 October 2024 to 5 April 2026 and completed from 6 April 2025. In such cases disposals will be subject to the new rates of CGT unless:

a) the parties to the contract can demonstrate that they did not enter into the contract with a purpose of obtaining a tax advantage by reason of the timing rule in section 28 of the Taxation of Chargeable Gains Act 1992

b) where the parties to the contract are connected, that the contract was entered into for wholly commercial reasons.

Where a) or b) apply, a statement must also be made where the gain exceeds £100,000.

Two additional rules will apply in certain circumstances where an election is made to disapply the CGT share reorganisation provisions for the purposes of claiming Business Asset Disposal Relief.

The first rule applies in the case of a reorganisation of the shares of a single company before 30 October 2024, where the shareholder continues to meet the conditions for claiming Business Asset Disposal Relief on the shares they hold on that date. The rule means that the gain resulting from the making of an election will be chargeable at the CGT rates applying at the date the election is made. The rule will also apply to reorganisations on or after 30 October 2024 for the phased increase in the CGT rate for Business Asset Disposal Relief gains.

The second rule applies in the case of a reorganisation resulting from an exchange of shares for those in another company before 30 October 2024. The rule means that the gain resulting from the making of an election will be chargeable at the CGT rates applying at the date the election is made where either of these conditions are met:

  • The companies involved in the exchange are owned or controlled by substantially the same persons.
  • The persons who held shares in the first company hold a greater percentage of the shares in the company that issued the shares in exchange for them and, at the time of the election, the shareholder continues to meet the conditions for claiming Business Asset Disposal Relief on a disposal of their new shares.

These rules will also apply to share exchanges on or after 30 October 2024 for the phased increase in the CGT rate for Business Asset Disposal Relief gains.

A separate rule will apply where an election is made to disapply the Capital Gains Tax share reorganisation rules in order to claim Investors’ Relief. Where, on or after 30 October 2024, the shareholder continues to meet the conditions for claiming Investors’ Relief on their shares and an election under section 169VT of the Taxation of Chargeable Gains Act 1992 is made on or after 6 April 2025, then the share disposal is to be treated as taking place at the time the election is made, meaning that the new CGT rates will apply. This rule will also apply to reorganisations on or after 30 October 2024 for the phased increase in the CGT rate for Investors’ Relief gains.