CAPITAL GAINS TAX Capital Gains Tax rates
Comment ‘Over time, the government intends to create a single adult wage rate… from April 2025, the National Minimum Wage for 18-20 year olds will be £10.00 per hour, an increase of 16.3%, the largest ever increase in both cash and percentage terms. This means a boost to annual earnings of over £2,500 for nearly 200,000 young people across the UK.’
The Capital Gains Tax rates increased for disposals, other than of residential property and carried interest, made on or after 30 October 2024. The basic rate of 10% increased to 18% and the 20% rate increased to 24%. No changes were made to the rates applying to the disposal of residential properties of 18% and 24%. The rate applying to trustees and personal representatives increased from 20% to 24% from the same date. Comment The changes in the main rates of Capital Gains Tax brings them in line with those paid on disposal of residential property. This means that there will be no need going forward to differentiate between the types of property being disposed of. Capital Gains Tax annual exemption The annual exempt amount will remain at £3,000 for 2025/26. Business Asset Disposal Relief and Investors’ Relief The rate applying for individuals claiming Business Asset Disposal Relief and Investors’ Relief will increase from 10% to 14% for disposals made on or after 6 April 2025. The rate will increase again to 18% for disposals made on or after 6 April 2026. In addition, the lifetime limit for Investors’ Relief reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. This limit takes into account any prior qualifying gains where the relief was claimed. INHERITANCE TAX Inheritance Tax nil rate bands The nil rate band has been frozen at £325,000 since 2009 and this will continue to be frozen up to 5 April 2030. An additional nil rate band, called the ‘residence nil rate band’ is also frozen at the current £175,000 level, as is the residence nil rate band taper starting at £2 million. These are also frozen until 5 April 2030. Unused pension funds and death benefits The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes from 6 April 2027.
Taxable benefits for company cars The rates of tax for company cars are amended for 2025/26: • The charge for zero emission cars rises from 2% to 3%.
• The charge for other cars increases by 1%. • The maximum benefit of 37% remains.
The government has confirmed increases to the benefit in kind rates for company cars for tax years up to and including 2029/30. Car fuel benefit charge The car fuel benefit charge is £28,200 from 6 April 2025. Company vans The van benefit charge is £4,020 and the van fuel benefit charge is £769 from 6 April 2025. Treatment of double cab pick-up vehicles The government will treat double cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes. From 1 April 2025 for Corporation Tax, and 6 April 2025 for Income Tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind and some deductions from business profits. The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025. Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6 April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.
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