The UK has recently seen some of the most significant Capital Gains Tax (CGT) changes in decades, with new rules taking effect in 2024 and 2025. These reforms impact individuals, landlords, investors, and business owners, meaning more people are now caught by CGT than ever before. Understanding how the latest changes work — and how to plan around them — is vital if you want to reduce your CGT liability and protect your wealth. 

Changes

From 30 October 2024, CGT rates rose considerably. Basic rate taxpayers now pay 18% on gains, up from 10%, while higher rate taxpayers face 24%, an increase from 20%. This brings the tax treatment of most assets much closer to that of residential property gains, making disposals such as shares, investments, and second homes more expensive from a tax perspective. 

Another major change is the reduction of the annual exempt amount (AEA) — the tax-free allowance for capital gains. In 2022/23 the allowance was £12,300, but it fell to £6,000 in 2023/24 and has been cut again to just £3,000 from April 2024. As a result, even relatively modest asset sales may now create a taxable event, increasing the importance of forward planning.

The government has also tightened reliefs. From 6 April 2025, Business Asset Disposal Relief (BADR) and Investors' Relief will no longer be taxed at 10%. Instead, the rate rises to 14%, with a further increase to 18% from April 2026. The lifetime limit for Investors' Relief has also been reduced to £1 million for disposals on or after 30 October 2024, matching the BADR cap. Additionally, carried interest will be taxed at a new flat rate of 32% from April 2025. For business owners, entrepreneurs, and investors, these shifts make timing disposals even more critical.

So, what does this mean in practice? Planning is now essential. Making use of the £3,000 allowance each year, spreading disposals across multiple tax years, and considering whether to bring forward sales before rate increases could help lower tax bills. Business owners may want to explore whether selling assets before April 2025 allows them to lock in the lower 10% BADR rate. Tax-efficient vehicles such as ISAs and pensions remain powerful tools for sheltering gains, while recording and carrying forward losses can also help to reduce your CGT liability.

Interestingly, the government expected these reforms to boost revenues, but HMRC receipts have actually fallen — from nearly £17 billion in 2022/23 to £13.1 billion in 2024/25. Many taxpayers have delayed sales to avoid higher CGT, highlighting the importance of careful planning and professional advice.

The reality is that more people will now pay more tax on disposals, but with the right strategy it is still possible to minimise Capital Gains Tax in 2025 and beyond. Whether you are selling shares, disposing of property, or planning a business exit, tailored tax advice is now more valuable than ever.

At Finovate Accountancy, we help clients navigate complex tax changes and implement strategies to keep their tax exposure to a minimum. Our experienced team will assess your position, identify opportunities for savings, and guide you through every step of the process.

👉 Book a free consultation today to discuss the Capital Gains Tax changes 2025 UK and discover how you can protect your wealth with expert guidance.