Most UK tax changes happen slowly. Allowances erode in real terms. Thresholds freeze while wages rise. The effect is gradual, quiet, and by the time it's noticeable, it's already been happening for years. Capital gains tax in 2024 was different. On the afternoon of 30 October 2024, with the Autumn Budget, two things happened at once: the rates went up immediately, and the annual exemption — already gutted over the previous two years — shrank again. For anyone holding a business, a share portfolio, or an investment property, the rules governing what HMRC takes when you sell changed permanently and substantially that day.
In the October 2024 Autumn Budget, CGT rates on non-residential assets rose immediately from 10% (basic rate) and 20% (higher rate) to 18% and 24% respectively. The annual CGT exemption has already been cut from £12,300 (2022/23) to just £3,000 (2024/25), meaning more gains are taxed and at higher rates. Business Asset Disposal Relief rose from 10% to 14% in April 2025, with a further increase to 18% planned for April 2026.
What Changed in October 2024
Prior to 30 October 2024, CGT rates on most assets (excluding residential property) were 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers. These rates had been in place since 2016. With immediate effect from the Budget, rates rose to 18% and 24% respectively — an 80% increase for basic rate taxpayers and a 20% increase for higher rate taxpayers.
Residential property CGT rates, which had been 18% and 28%, were actually slightly reduced: they are now aligned with the general rates at 18% and 24%. This is the only CGT change that produced a nominal reduction for some taxpayers — those previously paying 28% on residential property gains now pay 24%. The practical effect, however, is that the reduction in the residential rate was more than offset by the increase in the general rate and the near-elimination of the annual exemption.
Business Asset Disposal Relief (BADR, formerly Entrepreneurs' Relief) provides a reduced CGT rate on qualifying business disposals up to a lifetime limit of £1 million. This rate rose from 10% to 14% in April 2025, with a further increase to 18% planned for April 2026 — when it will be aligned with the general basic rate. The £1 million lifetime limit remains unchanged from its reduction from £10 million in 2020.
The Annual Exemption Cuts: 2022 to 2024
The annual CGT exempt amount is the threshold below which gains are not taxed. For two decades, it broadly tracked inflation. Then it was frozen, then cut. The trajectory:
| Tax Year | CGT Annual Exemption | Change | CGT Rate (Higher Rate, shares) |
|---|---|---|---|
| 2022/23 | £12,300 | Final year at £12,300 | 20% |
| 2023/24 | £6,000 | –51% | 20% |
| 2024/25 (pre-Budget) | £3,000 | –50% | 20% |
| 2024/25 (post-Budget, Oct 2024) | £3,000 | — | 24% |
| 2025/26 | £3,000 | Frozen | 24% |
The combined effect of a smaller exemption and higher rates means the tax due on any given gain has increased substantially. Consider a gain of £50,000 on a share portfolio disposal:
- 2022/23 (higher rate taxpayer): Gain £50,000 minus £12,300 exemption = £37,700 taxable at 20% = £7,540 CGT
- 2025/26 (higher rate taxpayer): Gain £50,000 minus £3,000 exemption = £47,000 taxable at 24% = £11,280 CGT
- Increase: £3,740 more tax (49.6% higher bill) on the identical transaction
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The Full Cost: CGT Bills at Different Gain Levels
| Taxable Gain | CGT Bill 2022/23 (HR taxpayer) | CGT Bill 2025/26 (HR taxpayer) | Extra Tax | % Increase |
|---|---|---|---|---|
| £20,000 | £1,540 | £4,080 | £2,540 | +165% |
| £50,000 | £7,540 | £11,280 | £3,740 | +50% |
| £100,000 | £17,540 | £23,280 | £5,740 | +33% |
| £200,000 | £37,540 | £47,280 | £9,740 | +26% |
| £500,000 | £97,540 | £119,280 | £21,740 | +22% |
Note: Based on higher rate taxpayer, general asset disposal (not residential property). Figures rounded to nearest £10. Assumes no other CGT reliefs applied.
Property CGT: The Rules
For UK residential property disposals — second homes, buy-to-let properties, inherited property — the position is slightly different. CGT rates on residential property were 18% (basic rate) and 28% (higher rate) until October 2024, when they were reduced to 18% and 24% to align with the new general rates. This means higher rate taxpayers selling a second property now pay 24% rather than 28% — a reduction of 4 percentage points.
However, the 60-day reporting and payment rule remains in force: any CGT on a UK residential property disposal must be reported and paid to HMRC within 60 days of completion. Failure to comply attracts automatic penalties. HMRC's UK Property Reporting Service handles these submissions.
Private Residence Relief (PRR) remains fully available on a main home occupied throughout ownership. Where a property has been rented out or used partly for business, PRR is partial. The final period exemption — previously 36 months, reduced to 18 months in April 2020, and again to 9 months in April 2020 — means only the last 9 months of ownership qualify automatically for exemption regardless of occupation.
Business Disposal Relief (formerly Entrepreneurs' Relief)
BADR allows qualifying business owners to pay a reduced CGT rate on the first £1 million of lifetime gains from business disposals. Qualifying assets include shares in a personal company (where you hold at least 5% of shares and voting rights and have worked for the company), business assets on cessation, and trust business assets.
The rate trajectory under BADR makes sobering reading for entrepreneurs:
- Pre-2020: 10% on up to £10 million lifetime gains
- 2020 onwards: 10% on up to £1 million lifetime gains
- April 2025: 14% on up to £1 million lifetime gains
- April 2026: 18% on up to £1 million lifetime gains
On a £1 million qualifying business disposal — representing perhaps 20–30 years of entrepreneurial work — the CGT due under BADR in 2026/27 will be £177,000 (18% on £997,000 after the £3,000 exemption). In 2020/21, the same disposal generated £99,700 (10% after the then-£12,300 exemption). The bill has risen 77% in five years.
Legitimate Ways to Reduce Your CGT Bill
Several legal strategies remain available to reduce CGT liability. None are tax avoidance — they are structural decisions that change when or how gains are realised:
- ISA wrapper: Transfer future investments into a Stocks & Shares ISA. Gains within the ISA are completely free of CGT regardless of size.
- Bed and ISA: Sell assets outside the ISA, realise a gain (using the annual exemption), and immediately repurchase within the ISA. Future gains are then sheltered.
- Spousal transfer: Assets can be transferred between spouses and civil partners at no gain / no loss. Both partners can then use their own annual exemptions on disposal — doubling the effective tax-free allowance.
- Loss harvesting: Crystallise losses in the same tax year to offset gains. Losses carried forward from previous years can also reduce the current year's taxable gain.
- Pension contributions: Making pension contributions expands the basic rate band, potentially bringing a higher rate gain partially into the lower CGT rate band.
- SEIS/EIS investments: Investing gains into qualifying SEIS/EIS companies can defer or in some cases eliminate CGT liability, though this carries significant investment risk.
Move Future Gains Inside an ISA or SIPP
Using the annual ISA allowance (£20,000) or pension contributions to shelter future investment gains is the most straightforward CGT reduction strategy available. Every pound of gain inside a tax wrapper is permanently exempt from CGT.
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