The UK’s capital gains tax (CGT) system underwent significant changes in October 2024, following the Chancellor Rachel Reeves’ Autumn Budget.
The adjustments affect everyone from casual investors to landlords, entrepreneurs, and those disposing of crypto assets — and, crucially, HMRC’s outdated self-assessment software has not kept up with the mid-year changes.
For anyone filing a 2024–25 return, here is a comprehensive guide to the new rules, the key numbers, and what it means for your finances.
Old vs new CGT rates
Before October 30, 2024, CGT rates were set at relatively modest levels for both basic-rate and higher-rate taxpayers. For assets sold earlier in the 2024–25 tax year, the following rates still apply:
Basic-rate taxpayers: 10% on most gains (18% on residential property).
Higher/additional-rate taxpayers: 20% on most gains (28% on residential property).
After the budget, those rates increased significantly:
Basic-rate taxpayers: 18% on most gains (26% on residential property).
Higher/additional-rate taxpayers: 24% on most gains (30% on residential property).
The result is a much steeper tax bill for anyone realising gains after October 2024. For example, a higher-rate investor who made a £50,000 gain on shares in September 2024 would owe £10,000 in CGT under the old rules. The same gain realised in November would attract £12,000 in tax.
Annual exemption cut in half
Alongside rate rises, the government halved the annual CGT allowance from £6,000 to £3,000 for the 2024–25 tax year.
That means fewer gains can be realised tax-free and many more individuals — particularly those disposing of second homes, buy-to-let properties, or large share portfolios — will now fall into the CGT net.
The cut is especially impactful for first-time CGT payers. According to the Institute of Chartered Accountants in England and Wales (ICAEW), many taxpayers are unfamiliar with the complexity of CGT reporting and may struggle with the timing issues created by the mid-year rate change.
Interest charges and penalties
HMRC applies strict interest and penalty regimes where tax is underpaid or reported incorrectly.
Interest on late CGT payments: 8% (variable, tied to the Bank of England base rate plus a margin). Even a short delay can be costly. For example, a £10,000 underpayment left outstanding for six months could rack up £400 in interest.
Penalties for “careless” errors: Up to 30% of the tax owed. If HMRC considers a taxpayer should have known about the rate change or mis-used the self-assessment system without checking, penalties may apply in addition to interest.
Deliberate errors: Higher penalties (up to 70%) are possible where HMRC believes taxpayers intentionally mis-reported their liabilities.
This is why advisers are warning that anyone filing their own return should be especially vigilant this year.
Why HMRC’s system is causing confusion
The central complication is that HMRC’s self-assessment software was finalised before the October 2024 budget. As a result, it automatically applies the old CGT rates to the entire tax year, even for disposals that should attract the higher rates.
HMRC has issued a separate online calculator to help taxpayers correct their liabilities, but those unaware of the tool may unknowingly file an incorrect return.
Tax specialists report that HMRC is already sending out “nudge letters” to individuals who declared gains after October 30, asking them to amend their returns if the wrong rate has been applied.
Practical examples
Basic-rate investor sells shares in July 2024
Gain: £10,000.
Old rate: 10%.
Tax due: £1,000 (less £3,000 exemption if unused).
Same investor sells in November 2024
Gain: £10,000.
New rate: 18%.
Tax due: £1,800 (less £3,000 exemption).
Higher-rate landlord sells a rental property in September 2024
Gain: £50,000.
Old property rate: 28%.
Tax due: £14,000.
Same landlord sells in December 2024
New property rate: 30%.
Tax due: £15,000.
The timing of a sale within the tax year therefore has a material impact on the final bill.
Crypto and complex assets
The changes are particularly problematic for investors with high-frequency transactions, such as cryptocurrency traders. Identifying which sales fall before or after October 30 requires meticulous record-keeping. Accountants report widespread confusion, with some taxpayers unsure how to apportion gains accurately.
What taxpayers should do
Use HMRC’s CGT calculator rather than relying on the self-assessment system.
Check transaction dates carefully to ensure gains are taxed at the correct rate.
Consider professional advice, especially if gains are complex or involve property, crypto, or large share disposals.
File early to allow time to identify and correct errors before the January 2026 deadline.
The bottom line
The mid-year rate rise has created one of the most confusing CGT reporting seasons in years. With the annual exemption halved, rates higher across the board, and HMRC’s software lagging behind the changes, taxpayers need to take extra care.
Failing to do so could mean hefty penalties and interest charges, even for those who intended to pay the correct amount.
For investors and homeowners, the message is clear: check your dates, double-check your calculations, and don’t rely solely on HMRC’s self-assessment portal.
Read more:
CGT changes at a glance: what investors need to know about the new rules