Changes made to Capital Gains Tax (CGT) during the Autumn Budget 2024 include an increase in the lower and higher CGT rates to 18% and 24% respectively, an increase in Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) 14% from April 2025 and to 18% from April 2026 and an increase in the CGT rate on carried interest to 32% before transitioning to full Income Tax treatment.
The Chancellor, Rachael Reeves, announced the following measures:
Capital Gains Tax (CGT) Rates
|
Rates |
2026-27 |
2025-26 |
From |
From 6 April 2024 to |
|
Individuals: |
|
|
|
|
|
Basic rate carried interest gains |
N/A |
32% |
18% |
18% |
|
Trusts |
TBC |
24% |
24% |
20% |
|
Business Asset Disposal Relief (BADR) |
18% |
14% |
10% |
10% |
From 30 October 2024:
- The lower rate of CGT increased from 10% to 18%.
- The higher rate of CGT increased from 20% to 24%.
- The rate of CGT that applies to trustees and personal representatives increased from 20% to 24%
Transitional rules will apply to:
- Forestalling arrangements entered into in respect of unconditional but uncompleted contracts before 30 October 2024, and
- Business Asset Disposal Relief (BADR) and Investors’ Relief, where a contract is made from 30 October 2024 to 5 April 2026 and completed from 6 April 2025.
Disposals under these contracts will be subject to new Capital Gains Tax (CGT) rates unless:
- The parties 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 s.28 TCGA1992.
- Where the parties to the contract are connected, that the contract was entered into for wholly commercial reasons
If a gain exceeds £100,000, a statement is required.
There are two additional rules that will apply in certain circumstances where an election is made to disapply the CGT share reorganisation provisions for the purposes of claiming BADR.
Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) Rate
From 30 October 2024
- The lifetime limit for Investors’ Relief will be reduced to £1,000,000.
From April 2025
- The rate of Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) will rise from 10% to 14%, and then to 18% from 6 April 2026.
- The government has confirmed that the lifetime limit for BADR will remain at £1,000,000.
- There are special rules for
- Contracts entered into on or after 30 October 2024.
- Share reorganisations and exchanges where an election is made.
Carried interest
From April 2025
- The Capital Gains Tax (CGT) rate applied to carried interest will increase to 32%, irrespective of whether the individual is a basic rate or higher rate taxpayer.
From April 2026
- Carried interest will be fully taxed under the Income Tax framework, with tailored rules to reflect its specific nature.
- A multiplier of 72.5% is expected to be applied to qualifying carried interest that falls within the tax charge.
Capital Gains on the liquidation of a Limited Liability Partnership (LLP)
Finance Bill 2024-2025
- New legislation will deem a disposal to occur when an LLP is liquidated, where assets contributed by a member are transferred to them, a connected company, or another connected person.
- The chargeable gain accruing to the member will be calculated as if the gain had arisen at the time they initially contributed the asset to the LLP, disregarding section 59A.
- The LLP will remain liable for any gains in the usual manner from that time, based on the actual disposal of the asset.
Changes to alternative finance tax rules (refinancing)
From 30 October 2024
- Legislation will be introduced to provide that, where a person wishes to use alternative finance to raise capital using an asset they already own, a tax charge will not arise
Employee Ownership Trusts (EOTs)
From 30 October 2024
- There are changes to the conditions for obtaining CGT relief on the disposal of a controlling shareholding in a company to the trustees of an EOT including a trustee independence requirement, trustees must be UK resident, consideration paid must not exceed market value,, the vendor clawback period is extended and a specific relief to provide legislative certainty regarding the distribution tax treatment of contributions paid to the trustees.
See Employee Benefit Trusts (EBTs)
Useful guides on this topic
Autumn Budget 2024: At a glance
Our At a glance view to the Autumn Budget 2024
Our Autumn Budget 2024: Live Speech highlights
Our live feed summary of the highlights of the Chancellor's Autumn Budget speech.
Allowances & rates: Capital Gains Tax (CGT)
What are capital gains? What is Capital Gains Tax (CGT)? What are the Capital Gains Tax rates, bands, reliefs and exemptions?
Business Asset Disposal Relief (Entrepreneurs' Relief): At a glance
What is Business Asset Disposal Relief (BADR)? When does BADR apply? What is the rate of BADR? How to claim BADR.
Carried interest
What is carried interest? When does carried interest arise? How is carried interest taxed?
