The UK’s 2024 Autumn Budget introduced significant changes to capital gains tax (CGT), raising both the lower and higher rates .The lower rate will increase from 10% to 18%, and the higher rate will rise from 20% to 24%. This adjustment impacts gains on assets like shares, though rates for gains on residential property remain steady at 18% for basic-rate and 24% for higher-rate taxpayers.
- The main rates of Capital Gains Tax from 10% and 20%, that apply to assets other than residential property and carried interest, to 18% and 24% respectively for disposals made on or after 30 October 2024
- The main rate of Capital Gains Tax that applies to trustees and personal representatives from 20% to 24% for disposals made on or after 30 October 2024
- The rate of Capital Gains Tax that applies to Business Asset Disposal Relief and Investors’ Relief is increasing 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
Chancellor Rachel Reeves highlighted that even with these increases, the UK still offers some of the lowest CGT rates among G7 countries, aiming to maintain a competitive edge while addressing fiscal needs.
The budget also reduced the CGT annual exemption to £3,000, further increasing the tax burden on investors, especially those in higher tax brackets. This increase may influence investment behaviour, as financial advisors expect some investors to shift assets into tax-free accounts like ISAs and pensions to avoid CGT altogether.
Additionally, CGT on private equity gains, known as “carried interest,” will now be taxed at 31%, up from the general CGT rate. The changes reflect a broader strategy to increase government revenue without raising income tax or VAT rates. These changes are expected to raise billions in revenue, helping address a large deficit while also aligning with the UK government’s priorities to foster a culture of savings and investment across the country. The budget reflects a balance between increasing tax revenue and encouraging investment stability for UK residents and businesses.
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