HMRC’s Mid-Year Tax Trap: Are You Paying the Right Capital Gains Tax for 2024/25?

Labour’s October 2024 Budget brought an unexpected twist: capital gains tax rates jumped mid-year, but HMRC’s self assessment software hasn’t caught up. If you sold assets like shares, crypto, or property after 30 October, you’ll need to manually adjust your CGT to avoid costly mistakes.

Mid-Year CGT Hike: Are You Ready for HMRC’s Manual Calculations

In a rare mid-year move, the Chancellor’s October 2024 Budget hiked capital gains tax (CGT) rates to 18% for basic rate taxpayers and 24% for higher rate taxpayers—effective immediately. The aim? To prevent last-minute tax planning ahead of the new rates.

The twist: HMRC’s self assessment software isn’t equipped to handle rate changes mid-tax year. Normally, the system calculates CGT automatically—but now, anyone who sold assets after 30 October 2024 must manually adjust their tax calculations.

This affects anyone with disposals of shares, investment funds, second homes, crypto, and other chargeable assets in the period from 30 October 2024 to 5 April 2025. Ignoring this could lead to penalties, interest charges, or both.

Even commercial software may not have fully accounted for this change, so double-checking calculations is essential.

The Tax Twist You Didn’t See Coming

HMRC has provided an online adjustment calculator to help taxpayers determine the correct CGT for this split tax year.

Here at The Tax Faculty we urge caution for those relying solely on HMRC’s automated system who are at particular risk of mistakes. Manual verification is now essential.

And of course, if you’d like us to look at how any of this affects your personal situation, we’re always here to help.

How HMRC Wants You to Calculate CGT

The mid-year CGT increase has created a tricky situation for many taxpayers. If you’re unsure about how to calculate your capital gains tax, complete your self assessment correctly, or avoid potential penalties, we’re here to help.

Contact The Tax Faculty today to speak with our team of experts. We can guide you step-by-step, review your calculations, and ensure your tax return is accurate and compliant.

Get in touch now and take the stress out of CGT.

#CapitalGainsTax #CGT2024 #TaxHelp #SelfAssessment #HMRC #TaxCompliance #TheTaxFaculty #FinanceMadeSimple #TaxPlanning

Stay Ahead of CGT Errors

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

Contact Us

Contact us today on freephone 0800 0016 878 for a free consultation on all tax issues, or fill out the handy form below and we'll get back to you as soon as possible.

Alternatively, you can email us at info@thetaxfaculty.co.uk or complete the form below.

(Please note, non-UK callers may need to call 0207 101 3845 if your line cannot connect to our 0800 number)

Feel free to contact us through WhatsApp - we accept calls and messages.

Simply click the WhatsApp button below: