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Tax Planning

Understanding the New Capital Gains Tax Rates & Investors’ Relief Reductions

Recent changes push up CGT rates for most UK disposals, reduce the lifetime limit for Investors’ Relief, and adjust treatment of carried interest—everything you need to know to adapt.

By NomadicTax Research Team · 5-8 min read

Overview of CGT Rate Changes

From 30 October 2024, the UK's Capital Gains Tax (CGT) rates on non-residential property and non-carried interest assets increased:

  • From 10 % and 20 % to 18 % and 24 % for individuals disposing of chargeable assets. (gov.uk)
  • For trustees and personal representatives, rate increased to 24 %. (gov.uk)

Additionally,

  • Voluntary Investor’s Relief lifetime limit dropped from £10 million to £1 million for disposals from 30 October 2024 onward. (gov.uk)
  • Business Asset Disposal Relief and Investor’s Relief rate is set to rise from 10 % to 14 % from 6 April 2025, and then to 18 % from 6 April 2026. (gov.uk)
  • Carried interest (performance-related fund manager gains) will face a single CGT rate of 32 % from April 2025, and from April 2026 be taxed under the Income Tax regime. (gov.uk)

Who Is Affected Most

  • Individuals with gains from disposing non-residential assets.
  • Investors in unlisted trading companies hoping to use Investors’ Relief.
  • Fund managers with carried interest.
  • Trustees and personal representatives.

How To Mitigate Increased Liabilities

  • Schedule disposals before 30 October 2024, when former lower rates still applied.
  • For Investor’s Relief, ensure gains qualify and are disposed before hitting new lifetime limit.
  • For carried interest, plan so that gains either crystallise before April 2025 or evaluate whether future income-tax treatment is preferable, depending on marginal rates.
  • Leverage the Annual Exempt Amount (£3,000 for individuals in 2025-26) efficiently. (gov.uk)

Practical Example

Let’s assume Oliver is disposing of shares in a non-residential asset:

  • If the disposal occurs 29 October 2024, he may pay CGT at 10 % if within basic rate band.
  • If the same disposal is on 1 November 2024, he’s subject to 18 %, and likely higher effective rate depending on income.
  • If Oliver also had carried interest, from April 2025 he’d face 32 %, or under Income Tax from April 2026—much steeper.

Action Plan for Investors & Businesses

  1. Review pending disposals and decide whether to accelerate or defer based on new rate thresholds.
  2. Track Investor’s Relief usage to avoid surpassing new lifetime limit.
  3. For fund managers, estimate whether Income Tax regime post-April 2026 might produce better or worse results.
  4. Update internal accounting and forecasts to reflect higher CGT on gains.

Key Takeaways

  • CGT rates rose significantly for most gains from 30 October 2024 onward.
  • Investors’ Relief lifetime limit sharply reduced.
  • Carried interest faces both a higher CGT rate and a new tax regime from April 2026.

Knowing exactly when disposals happen relative to these dates makes the difference between large savings or bigger tax bills.

Sources

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