Capital Gains Tax: Time to act before autumn?
The National Institute for Economic and Social Research (Niesr) forecast last week that Rachel Reeves faces a £51 billion black hole in the UK’s public finances. The forecast said that she will have to raise taxes in the 2025 Autumn Budget if she is to meet her spending pledges and stick to her fiscal rules. Although the Niesr report is gloomier than some other forecasts, many recent reports have warned that the government’s situation means that it will have to raise taxes.
One consequence of this is that if you are thinking about selling the shares in your personal company, you should consider accelerating the sale in case rates of capital gains tax increase when the Autumn Statement is announced. The date for this has not yet been made known but normally this event occurs in late October/early November each year.
In the 2024 Autumn Statement, Rachel Reeves increased the main rate of capital gains tax from 20% to 24% and made changes to increase the rate of tax where Business Asset Disposal Relef (BADR) applies from 10% to 14% (increasing to 18% from 6 April 2026). Importantly, the new rates applied immediately from the date of the Autumn Statement, with anti-forestalling arrangements potentially applying unless contracts for sale had already become unconditional and completed.
At this stage it is, of course, not possible to know whether rates of capital gains tax will increase again in the Autumn Statement or whether Rachel Reeves will leave this tax alone and increase other taxes instead or freeze income tax thresholds for a longer period.
However, If you own shares in your personal company and would like to discuss your position further, please contact Heather Corben or Elizabeth Small.
