Key Tax Changes Affecting Capital Gains and Inheritance: What You Need to Know for 2024/25Dec 14 2023
The UK government has announced important changes in the areas of Capital Gains Tax and Inheritance Tax, set to take effect in the financial year 2024/25. These changes will have significant implications for individuals dealing with capital assets and inheritance. Let’s break down what these changes mean.
Capital Gains Tax (CGT) Adjustments
Reduction in Annual Exemption
- New Exemption Limit: The annual exemption for Capital Gains Tax will decrease to £3,000 in 2024/25, down from £6,000 in 2023/24.
- Increased Tax Liability: This reduction means that individuals selling capital assets, such as property or shares, will face higher tax liabilities if their gains exceed the new lower exemption limit.
- Current CGT Rates: For the 2023/24 tax year, the Capital Gains Tax rates range from 10% to 28%, depending on the seller’s tax status and the type of asset sold.
Planning Capital Disposals
If you are considering selling capital assets, it’s crucial to plan strategically in light of these changes. Consulting with a tax expert can help optimize your approach to minimize tax liabilities.
Inheritance Tax (IHT) Update
Frozen Nil Rate Bands
- Nil Rate Band: The inheritance tax nil rate band remains unchanged at £325,000 until April 2028.
- Residence Nil Rate Band: This also stays at £175,000, with the taper starting at an estate value of £2 million.
- No Change in Tax Rates: Contrary to speculations, there have been no alterations to the inheritance tax rates.
Whether it’s planning for capital disposals or managing inheritance tax implications, we are here to offer comprehensive support and guidance. Get in touch today.