Capital Gains Tax (CGT) receipts have been on a bit of a rollercoaster over the past couple of years.
After hitting a record high of £16.9 billion in the 2022/23 financial year, they dropped by around 23 per cent to £13.1 billion in 2024/25.
If you are a business owner or individual planning to sell assets, this change in CGT trends could have an impact on your tax position, and it is worth thinking about what it might mean for your financial planning.
Why have CGT receipts dropped?
You might have seen reports suggesting the drop is because more people are leaving the UK. In fact, the picture is more complicated.
CGT receipts often reflect what happened in the markets a couple of years earlier, because of the time it takes for gains to be reported and paid.
For example, if you sold shares or property in the 2023/24 tax year, you may not have had to pay CGT on those disposals until early 2025.
This means that the lower receipts we are seeing now are largely a result of weaker market conditions in previous years, when many people were understandably cautious about selling assets.
Why are CGT receipts likely to rise again?
Looking ahead, the Office for Budget Responsibility (OBR) expects CGT receipts to bounce back sharply, potentially hitting £19.7 billion this year, which would be 50 per cent higher than 2024/25.
There are a few reasons for this. Markets have picked up, property prices have risen, and many people rushed to complete sales ahead of expected tax changes in the Autumn Budget 2024.
On top of this, changes to Stamp Duty Land Tax (SDLT) from April 2025 encouraged a lot of property sales, which trigger CGT payments.
In addition, from April 2026, the rate of CGT payable under Business Asset Disposal Relief (BADR) will rise again, this time to 18 per cent.
This change will have a particular impact on business owners planning to sell or retire in the next few years and is likely to further increase CGT receipts going forward.
How to approach asset disposals in the current climate
If you are thinking about selling assets, this changing landscape is something to bear in mind:
- You could face a bigger tax bill if rates rise or if asset prices continue to increase.
- When you sell and when you report the gain could make a big difference.
- If you are planning to sell your business or make other large disposals, getting good advice early on can help you structure the deal in the most tax-efficient way.
Preparing for potential CGT changes in the next Budget
Although nothing is confirmed yet, there is a lot of speculation about possible CGT rate increases in the next Autumn Budget. This uncertainty is already prompting some people to bring forward sales of assets.
If you are considering a sale, it may make sense to explore your options now, rather than waiting until later in the year.
Acting early could help you lock in current rates and avoid being caught out by future tax changes.
If you would like a chat about how these trends might affect you, or if you need help planning for CGT on a future sale, we would be happy to help. Speak with our team today.
