Q: I own a second home worth £400,000, which I bought for £250,000 and I have shares valued at £50,000, which I purchased for £40,000. How will the recent Capital Gains Tax changes in the Budget impact what I owe if I sell these assets now compared to if I had done so before the changes were made?
A: You’re right to identify that Capital Gains Tax has changed in the latest Budget. The simple headline answer is that selling now would result in a slightly higher CGT liability (compared to before the announcement) because of the increased rate on investment gains.
We can see from your figures that you’ve gained £150,000 on your property. You needn’t worry about property though in terms of CGT rises. Residential property rates are not changing, so you won’t be losing out in that regard by selling now rather than before the Budget.
But with £10,000 gains on your investment assets, you will be liable to pay HMRC a bit more due to the increased rate on investment gains.
The main rates of CGT have been raised. The lower rate increases from 10% to 18%, while the higher rate rises from 20% to 24%.
For 2024 to 2025 you get a tax-free allowance of £3,000. This hasn’t changed.
In order to accurately work out what CGT you’d need to pay, we’d also need to know some other key details – i.e. what your other income and salaries are. CGT rates depend on your income tax band – hence the lower and higher rates mentioned above.
Please get in touch with our team if you’d like to delve into the detail of your CGT obligations.