The UK’s capital gains tax (CGT) regime has undergone one of its most significant shake-ups in years after Chancellor Rachel Reeves announced sweeping changes in her October 2024 Autumn Budget. The mid-year adjustments, which took effect from October 30, have left investors, landlords and entrepreneurs facing higher tax bills — and confusion over how to file returns correctly.
The reforms increased CGT rates across the board. For disposals made before the Budget, basic-rate taxpayers continued to pay 10% on most assets (18% on residential property), while higher-rate taxpayers faced 20% and 28% respectively. But sales completed after October are subject to sharply higher rates: 18% for basic-rate taxpayers (26% on property) and 24% for higher-rate taxpayers (30% on property).
The change means the timing of a sale within the tax year now has a major impact on the bill. For example, a higher-rate landlord selling a rental property in September would have faced a £14,000 CGT bill on a £50,000 gain. Making the same sale in December would attract £15,000 — £1,000 more.
Alongside rate hikes, the government halved the annual tax-free allowance from £6,000 to £3,000 for 2024–25. Tax specialists warn this will bring many more first-time payers into the CGT net, particularly those selling second homes, large shareholdings or crypto assets.
The Institute of Chartered Accountants in England and Wales said the reforms risk tripping up taxpayers unfamiliar with complex CGT rules, especially because HMRC’s self-assessment system has not been updated to reflect the new rates. The software still applies pre-Budget rates to the full tax year, meaning those who file returns without adjustments risk underpaying.
HMRC has launched a separate online calculator to help taxpayers apply the correct rates, and has already begun sending “nudge letters” to those declaring gains after October. Advisers warn that incorrect filings could attract not only interest charges — currently 8% on late payments — but also penalties of up to 30% for careless mistakes and as much as 70% for deliberate misreporting.
The changes pose particular challenges for cryptocurrency traders and others with frequent transactions, who must separate gains before and after October. Accountants report growing confusion among clients unsure how to apportion disposals accurately.
Experts are urging taxpayers to check dates carefully, use HMRC’s calculator instead of relying solely on self-assessment software, and consider professional advice for complex cases. Filing early, they say, will give individuals more time to correct errors ahead of the January 2026 deadline.
With higher rates, reduced allowances and outdated reporting tools, this year’s CGT season is expected to be among the most complex in recent memory.
