Travers Smith: Capital Gains Tax Post-Budget

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Post on Oct 31, 2024

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Travers Smith: Capital Gains Tax Post-Budget

The UK government's recent budget announcement has brought significant changes to the landscape of capital gains tax (CGT). Travers Smith, a leading law firm in the UK, provides expert insights into these changes and their implications for individuals and businesses.

Key Changes to Capital Gains Tax:

1. Annual Exempt Amount: The annual exempt amount for CGT remains unchanged at £12,300 for the 2023/24 tax year. This means individuals can make capital gains up to this amount without having to pay any CGT.

2. CGT Rates: There are no changes to the CGT rates for individuals. The rates remain as follows:

• Basic rate: 18%
• Higher rate: 28%

3. Entrepreneurs' Relief: This relief allows individuals to pay a reduced CGT rate of 10% on the first £1 million of qualifying gains from a business. No changes have been made to Entrepreneurs' Relief.

4. Residential Property CGT: For residential properties, there are no changes to the current rules. This means that:

• The main residence exemption continues to apply.
• Gains on second homes and buy-to-let properties are still subject to CGT at the usual rates.

5. Non-Resident CGT: The government is introducing a new Capital Gains Tax on UK residential property disposals by non-residents starting from April 2024. This change will apply to all disposals of UK residential property by non-residents, regardless of the property's value.

6. Changes to Inheritance Tax: The budget also included changes to inheritance tax, which can have an impact on capital gains tax. The nil-rate band for inheritance tax has been frozen until April 2028. This means the threshold at which inheritance tax is payable will remain at £325,000.

Implications for Individuals and Businesses:

Individuals: The freeze on the annual exempt amount and inheritance tax nil-rate band means that more individuals may find themselves liable for CGT. It is crucial for individuals to seek expert advice to understand the implications of these changes and plan their tax strategies accordingly.

Businesses: The introduction of the new Capital Gains Tax on UK residential property disposals by non-residents will have a significant impact on businesses involved in real estate, particularly those with international investors. Businesses need to ensure compliance with these new rules and consider the potential impact on their investments.

Travers Smith's Expertise:

Travers Smith is a leading UK law firm with a strong reputation for its expertise in capital gains tax. The firm's team of tax specialists can provide comprehensive advice on the implications of the recent budget changes and help clients navigate the complexities of CGT legislation.

For expert advice on capital gains tax and how the budget changes affect you, please contact Travers Smith.

Note: This blog post provides a general overview of the recent budget changes and does not constitute legal advice. It is crucial to seek professional advice for specific situations.