Capital gains tax on investment disposals

The rates of capital gains tax (CGT) payable on gains arising from assets other than residential property have been increased with immediate effect

Rates

Those taxpayers who decided to accelerate planned investment disposals before the Budget in anticipation of the predicted CGT hike will be pleased with their decision. From 30 October 2024 CGT is payable on profits from selling assets such as shares and commercial property at 18% (up from 10%) for gains falling into the taxpayer's basic rate band and 24% (up from 20%) at the higher or additional rate.

This brings the rates in line with CGT on residential property disposals, which will remain at 18% for basic rate and 24% for higher rate taxpayers.

The CGT rate applied to a transaction will be the rate prevailing at the date of exchange. Where a contract is unconditional, this will be the date on which the contract is signed.

Reliefs

Business asset disposal relief (BADR) offers a reduced CGT rate of 10% for qualifying business disposals, subject to a lifetime maximum of £1m. The lifetime limit will be maintained, however the rates applying to BADR will gradually creep up from 10% to 14% on 6 April 2025 and to 18% on 6 April 2026.

For assets that qualify for investors’ relief, the lifetime limit is reduced from £10m to £1m from 30 October 2024 and the rate will increase from 10% to 14% on 6 April 2025.

Tax paid by private equity managers on carried interest (their share of profits from successful deals) will rise from 18% (basic rate) or 28% (higher rate) to 32% (basic and higher rates) from April 2025, with a further review of the rules applying to carried interested expected from April 2026.