In today’s Autumn Budget, Chancellor Rachel Reeves announced an increase in the lower rate of Capital Gains Tax (CGT) from 10% to 18% and the higher rate from 20% to 24%.
The rates for residential property will remain at 18% and 24%.
Reeves pointed out that despite the raises, the UK will maintain the lowest CGT rates among European G7 economies.
Alongside these changes to the headline rates of CGT, Reeves will maintain the lifetime limit for business asset disposal relief at £1m, to encourage entrepreneurship and investment in businesses.
Business asset disposal relief will remain at 10% this year, before rising to 14% in April 2025 and to 18% from 2026-27, maintaining a significant gap compared to the higher rate of CGT.
Together, the OBR said that these measures would raise £2.5bn.
Reeves said: “We need to drive growth, promote entrepreneurship and support wealth creation while raising the revenue required to fund our public services and restore our public finances.”
Joshua Elash, chief executive officer of lender MT Finance Group, said: “The Chancellor is trying to find a way to put Britain back on track with responsible fiscal policy while also stimulating growth.
“The initial impetus is clearly on public spending and large corporate investment to drive growth given the initial challenges this budget poses to the SME community.
“However, if Rachel Reeves can get growth, the otherwise moderately painful pieces fall into place.
“In the short term, the increases to NI employers’ contributions may have a negative impact on wage growth and may lead to a slower labour market but we expect this higher rate to be quickly normalised.
“Equally, the increases to capital gains taxes aren’t as aggressive as mooted and at the new levels will not dampen any serious private equity activity.
“We don’t see asset holders across any sector sitting tight for an extended period, or relocating, at the new tax levels.
“The SME community has the most to gain from a more balanced economy and is more resilient than the press would suggest. This Budget is the right step in the right direction.”
