The 2024 Autumn Budget saw the government introduce changes to the Capital Gains Tax (CGT) and Business Asset Disposal Relief (BADR) regimes in the UK. These changes are designed to increase tax revenue while ensuring the UK tax system remains competitive internationally.
Here's a brief overview of the changes to Capital Gains Tx (CGT) and Business Asset Disposal Relief (BADR) in the UK for 2024:
Capital Gains Tax (CGT) Changes
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New Rates: The main CGT rates have increased from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. These changes apply to disposals made on or after October 30, 2024.
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Residential Property: The CGT rates for residential property disposals remain unchanged at 18% for basic rate taxpayers and 24% for higher rate taxpayers.
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Trusts and Personal Representatives: The CGT rate for trustees and personal representatives has increased from 20% to 24%.
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Carried Interest: The CGT rate on carried interest will increase to 32% from April 6, 2025, before transitioning to full income tax treatment.
Business Asset Disposal Relief (BADR) Changes
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Rate Increase: The CGT rate for BADR will increase from 10% to 14% starting April 6, 2025, and then to 18% from April 6, 2026.
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Lifetime Limit: The lifetime limit for BADR remains at £1 million.
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Anti-Forestalling Rules: Special rules have been introduced to prevent taxpayers from exploiting the timing of contracts to benefit from the current lower rates.
As always, planning the disposal of assets and business exit is key, advance planning allows for effective tax planning, understanding available reliefs, timing tax payments and being aware of any responsibilities in terms of submissions to HMRC. With the recent changes, especially in respect of BADR, planning and timing for any intended business closures is key.
At PayStream we continue to offer our clients tailored advice and assistance in all tax related matters, our team of accountants are on hand to answer questions and provide the assistance you need.
