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capital gains tax 2025
If you're considering selling a residential property, or investments this year, you'll want to know about the recent changes to Capital Gains Tax. 
 
As we enter 2025, many of our clients are eager to understand how these new rules will impact their plans. With the tax year ending in April, it's of utmost importance to grasp the changes and their potential effects on your decisions. 

What's New in 2025? 

The tax rates changed significantly at the end of 2024, and while they're simpler to understand now, you might find yourself paying more than before. 
 
You'll now pay 18% if you're a basic rate taxpayer or 24% in the higher tax bracket. These rates will look familiar for those of you with rental properties, but this represents quite an increase for everyone else selling assets. 

Understanding What You'll Pay 

Let's look at an example: If a higher rate tax payer sold a buy to let property for £500,000 and they bought it ten years ago for £300,000. 
 
This leaves a £200,000 profit. After taking off the £3,000 tax-free allowance, they may need to pay Capital Gains Tax on £197,000. 
 
Under the new rates, the tax bill would be £55,160 – £7,880 more than it would have been before the changes. 

What Gets Taxed and What Doesn't? 

You'll need to pay this tax when you sell things like rental properties (we're seeing plenty of these sales across the country at the moment). 
 
If you have lived in your own buy to let property, then you may be able to claim Private Residence Relief. If so, then we may able to reduce what Capital Gains Tax you owe. 
 
Did you know that if you sell UK residential property that attracts Capital Gains Tax, then an online declaration must be to HMRC within 60 days of completion. If a tax liability arises, then this must also be paid to HMRC within the 60 days. 

Planning to Sell Your Business? 

If you're contemplating selling your business, there's a crucial aspect you should be aware of. The special tax break for business owners (Business Asset Disposal Relief) is changing. 
 
The tax rate will increase to 14% this April and 18% next year. It's still a better deal than the standard rates, but consider it carefully when you sell. 

Making the Right Moves 

Now might be a good time to take stock of your assets and plan any sales carefully. If you're considering selling in 2025, consider whether splitting sales across tax years might work better for you - you'll get next year's £3,000 allowance, too. 
 
Whatever you plan to sell, keep all your paperwork – knowing precisely what you paid for something and any money you've spent improving it can help reduce your tax bill. 

Let's Talk About Your Plans 

January to March is traditionally our busiest period for tax planning and with good reason. These new CGT rules underscore the criticality of planning, making professional advice more important than ever. Rest assured, we're here to provide the support and guidance you need. 
 
We've been helping individuals and business owners with their accounts and tax planning for years, and we can help you make the most of the remaining months in this tax year. 
 
If you're worried about how these changes might affect you or plan to sell something valuable, come in for a chat. We can explain everything in plain English and help you decide the best course of action before the tax year ends. 

Want to know more? 

You can contact Hammond-Barr accountants on 01438 281281 or via email at [email protected]
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