Tax Rates

Starting 30 October 2024, Capital Gains Tax rates will rise for disposals, excluding residential property and carried interest. The basic rate will increase from 10% to 18%, while the 20% rate will rise to 24%.

The rates for residential property disposals (18% and 24%) will remain unchanged.

The rate for trustees and personal representatives will also increase from 20% to 24, effective from the same date.

Annual Exemption: GBP 3,000.

BADR – Business Asset Disposal Relief

From 6 April 2025, the rate for individuals claiming Business Asset Disposal Relief and Investors’ Relief will rise from 10% to 14%, with a further increase to 18% for disposals made on or after 6 April 2026.

Additionally, the lifetime cap for Investors’ Relief will be lowered from £10 million to £1 million for qualifying disposals made from 30 October 2024 onwards. This limit will include any previous qualifying gains where relief was claimed.

Carried interest rates and reform

From 6 April 2025, carried interest will be taxed at a flat rate of 32%. Beginning April 2026, all carried interest will be subject to income tax, with a 72.5% multiplier applied to qualifying interest.

Capital Gains Tax on LLP Dissolution

When a member of a Limited Liability Partnership (LLP) has contributed assets to the LLP, any chargeable gains up to the amount of that contribution will be taxed upon liquidation if the assets are transferred back to the member or a connected person. The tax charge will apply to the member, and this rule will be effective for liquidations starting on or after 30 October 2024.

Limiting Tax-Free Transfers of UK Tax-Relieved Pensions Abroad

The Overseas Transfer Charge (OTC) imposes a 25% tax on transfers to Qualifying Recognised Overseas Pension Schemes (QROPS), unless an exemption is applicable. Previously, transfers to QROPS based in the EEA and Gibraltar were exempt from this charge; however, this exemption will end for transfers made on or after 30 October 2024.

Inheritance Tax

  • The nil rate band, set at £325,000 since 2009, will remain frozen until 5 April 2030. Similarly, the ‘residence nil rate band’ stays fixed at £175,000, with its taper threshold starting at £2 million, also frozen through 5 April 2030.
  • Starting 6 April 2027, the government will include unused pension funds and death benefits from pensions in a person’s estate for inheritance tax purposes.
  • Starting 6 April 2026, agricultural and business properties will qualify for a 100% Inheritance Tax relief up to a combined limit of £1 million. Any property value exceeding this limit, as well as quoted shares not listed on recognized stock exchanges like AIM, will receive a 50% relief.
  • Beginning 6 April 2025, Agricultural Property Relief will be expanded to include land managed under environmental agreements with UK government bodies, devolved governments, public bodies, local authorities, or other approved organizations.