Capital Gains Tax
Capital Gains Tax rates
The Capital Gains Tax rates increased for disposals, other than of residential property and carried interest, made on or after 30 October 2024. The basic rate of 10% increased to 18% and the 20% rate increased to 24%. No changes were made to the rates applying to the disposal of residential properties of 18% and 24%.
The rate applying to trustees and personal representatives increased from 20% to 24% from the same date.
Comment
The changes in the main rates of Capital Gains Tax brings them in line with those paid on disposal of residential property. This means that there will be no need going forward to differentiate between the types of property being disposed of.
Capital Gains Tax annual exemption
The annual exempt amount will remain at £3,000 for 2025/26.
Business Asset Disposal Relief and Investors' Relief
The rate applying for individuals claiming Business Asset Disposal Relief and Investors' Relief will increase from 10% to 14% for disposals made on or after 6 April 2025. The rate will increase again to 18% for disposals made on or after 6 April 2026.
In addition, the lifetime limit for Investors' Relief reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. This limit takes into account any prior qualifying gains where the relief was claimed.
Inheritance Tax
Inheritance Tax nil rate bands
The nil rate band has been frozen at £325,000 since 2009 and this will continue to be frozen up to 5 April 2030. An additional nil rate band, called the 'residence nil rate band' is also frozen at the current £175,000 level, as is the residence nil rate band taper starting at £2 million. These are also frozen until 5 April 2030.
Unused pension funds and death benefits
The government will bring unused pension funds and death benefits payable from a pension into a person's estate for Inheritance Tax purposes from 6 April 2027.
Agricultural Property Relief and Business Property Relief
From 6 April 2026, agricultural and business property will continue to benefit from the 100% Inheritance Tax relief up to a limit of £1 million. The limit is a combined limit for both agricultural and business property. Property in excess of the limit will benefit from a 50% relief, as will, in all circumstances, quoted shares designated as 'not listed' on the markets of recognised stock exchanges, such as AIM.