How Will Changes to Capital Gains Tax Affect you in the 2024-25 Tax Year

Capital Gains Tax (CGT) is a tax levied on the profit earned from selling or disposing of certain assets. Assets such as land and property, like second homes and investment properties—as well as art, antiques, and shares held outside of an ISA are just a few items that are subject to CGT. 

Dental & Medical Financial Services have been assisting doctors with their financial planning for over 30 years. With the spring budget, changes to CGT have been introduced, but how will they affect you in the 2024/25 tax year? To learn more, read on.

This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.

What changes have been made?

At the start of this tax year, CGT’s Annual Exemption Allowance (AEA) was reduced to £3,000. You only have to worry about Capital Gains Tax if your overall gains for the tax year (subtracting any losses and adjusting for any applicable relief) are above the annual exempt amount. 

For basic rate taxpayers, they are subject to a 10% rate on most assets, while higher and additional rate income taxpayers are subject to 20%. In this year’s Spring Budget, a significant change for residential property gains was introduced. For disposals made on or after 6 April 2024, the higher CGT rate decreased from 28% to 24%.

With asset prices and inflation already high, it could result in potentially challenging circumstances for people who have investments or assets outside of tax-advantaged accounts.

The importance of tax-efficient investments

If you are dealing with some assets in taxable environments, then it’s important you are also taking full advantage of the tax-efficiency of ISAs and pensions to help mitigate the accumulation of future CGT liabilities.

Thanks to the changes introduced in the 2024/25 tax year, an estimated additional 260,000 individuals and trusts may find themselves liable for CGT. This means it’s even more crucial to carefully plan your tax strategies to minimise liability. 

Need help managing your tax obligations? 

If you’re in need of assistance managing your CGT and other tax obligations, our team of experts is here to help. Contact Dental & Medical Financial Services today for tax advice catered specifically to you and your needs, all while ensuring your tax plan aligns with your financial goals and overall plan. 

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