Capital Gains Tax (CGT)
- New CGT rates effective from 30 October 2024:
- Lower rate rose from 10% to 18%
- Higher rate rose from 20% to 24%
These apply to non-residential property assets and carried interest, aligning them with residential property CGT rates.
- Carried Interest:
- A single 32% CGT rate applies from 6 April 2025, replacing earlier tiered rates (18%/28%).
- Business Asset Disposal Relief (formerly Entrepreneurs’ Relief):
- Rate increases to 14% from 6 April 2025, rising further to 18% in April 2026.
- The £1 million lifetime allowance remains unchanged.
Inheritance Tax (IHT) & Related Reforms
- Non-Domicile (Non-Dom) Tax Status:
- The non-dom regime has been abolished as of 6 April 2025. The change incorporates overseas assets fully into the IHT system.
- The government expects this to raise approximately £33 billion over five years.
- Early data suggests fewer wealthy individuals have left the UK than initially feared.
- Potential Future IHT Reforms:
- The Treasury is considering tightening the “seven-year rule” and introducing a lifetime cap on tax-free gifts, which could significantly alter estate planning practices.
- Agricultural Property Relief (APR):
- Starting April 2026, farms and agricultural estates valued over £1 million will be subject to 20% IHT (half the standard rate). This can be paid over 10 years.
- The move has generated strong protests from farming groups concerned about forced asset sales.
- Retention of IHT Revenue:
- Inheritance Tax is forecast to raise around £9.1 billion in 2025–26.
Office for Budget Responsibility
- Inheritance Tax is forecast to raise around £9.1 billion in 2025–26.
