The UK government’s October 2024 Budget introduced major changes to Capital Gains Tax (CGT) rates, affecting thousands of London property owners, business sellers, and investors. Proper planning is vital to avoid unexpected tax bills and to take full advantage of the remaining CGT reliefs.
Summary of CGT Rate Changes
From 30 October 2024 onwards, CGT rates increased as follows:
- Basic rate CGT: rose from 10% to 18%
- Higher rate CGT: rose from 20% to 24%
- Business Asset Disposal Relief (BADR): previously 10%, now 14% from April 2025, rising to 18% from April 2026
- Investors’ Relief: rate matches BADR, 14% from April 2025, 18% from April 2026
For most individuals, gains from assets—such as property (outside of your primary residence), stocks, and business sales—will now be taxed at the new higher rates.
Who Is Affected?
- Property owners: Selling rental or second properties
- Business owners: Those selling their companies, shares, or qualifying assets
- Investors: Those realising capital gains from stocks or crypto
- All individuals, including London residents, who have chargeable gains above their annual exempt amount (£3,000 for 2025/26)
Practical CGT Calculation Scenarios
1. Property Sale Example (Higher Rate Taxpayer)
Suppose you sell a London rental property at a profit:
- Sale profit: £40,000
- Exempt CGT allowance: £3,000
- Taxable gain: £37,000
2024 Tax Year Before Budget Changes
- Higher rate CGT: 20% of £37,000 = £7,400
2025 Tax Year After Rate Increase
- Higher rate CGT: 24% of £37,000 = £8,880
Result: You pay £1,480 more in tax than before the changes.
2. Business Sale Using BADR
- Qualifying business gain: £120,000
Before Apr 2025 (BADR at 10%)
- CGT due: 10% of £120,000 = £12,000
Apr 2025 to Apr 2026 (BADR at 14%)
- CGT due: 14% of £120,000 = £16,800
From Apr 2026 (BADR at 18%)
- CGT due: 18% of £120,000 = £21,600
Over two years, the same business disposal will cost £9,600 more in tax!
3. Mixed Asset Disposal (Standard CGT)
Suppose you sell shares, with total taxable gain after exemption:
- Taxable gain: £50,000
- For higher rate taxpayers (above basic income band)
Before Budget
- 20% of £50,000 = £10,000
After Budget
- 24% of £50,000 = £12,000
Paying £2,000 more tax.
Strategies to Minimize CGT Liability – 2025 and Beyond
1. Use Allowable Exemptions and Losses
- Offset gains with any eligible capital losses carried forward
- Be sure to claim the annual CGT exemption (£3,000)
- Optimally sell assets in different tax years to spread gains
2. Accelerate or Delay Asset Sales
- If considering selling business assets, shares, or property, factor in BADR rate increases: disposing of assets before April 2026 could save up to 4% tax.
- Consider staggered sales of non-qualifying assets across tax years to remain below rate thresholds.
3. Claim BADR/Investors’ Relief Properly
- Make sure your business qualifies for BADR; assets must be held for at least two years.
- Plan disposals ahead of the 2026 rise to 18%, maximising benefits where possible.
4. Professional Tax Planning
- Work with MTA Accountants for proactive CGT forecasting, loss harvesting strategies, relief optimisation, and advice on transaction timing.
- Our experts help structure company sales, asset transfers, and investment disposals to keep your tax bill as low as possible, guiding you through all compliance steps.
What Do The Changes Mean for London Property Owners, Businesses, and Investors?
- Rental property sales: London landlords now face a higher tax bill when selling investment properties.
- Business disposals: London entrepreneurs and SME owners should factor BADR rate increases into succession or retirement plans—potential savings in final sale timing.
- Investors: London residents with significant asset holdings should pay close attention to the higher rate threshold and make full use of losses and the lower bands.
As rates and relief thresholds increase over 2025 and 2026, getting advice before transactions is crucial.
Final Thoughts: MTA Accountants Can Help
CGT rate hikes can have a big impact on the net value you receive when exiting property, selling assets, or disposing of your business. Professional planning is more important than ever to:
- Minimise your tax bill
- Avoid compliance pitfalls
- Optimise use of reliefs and allowances before further changes occur
Contact MTA Accountants for a CGT review, sale timing and structure advice, and support on BADR applications—giving you more financial clarity and confidence in your next property or business sale.
For tailored CGT advice and example calculations for your own London property or business sale, book a confidential consultation with MTA Accountants today!