2024 Autumn Budget: Capital Gains rumour turns out to be true (sort of)

Consilium Tax partner Craig Coyle dissects UK Chancellor Rachel Reeves’s 2024 Autumn Budget and highlights the key lessons for business owners and entrepreneurs.

The Capital Gains Tax rumour turns out to be true (sort of)

Pre-Budget I pondered the rumour of a Capital Gains Tax (CGT) increase being used to swell the Government’s coffers as deals were fast-tracked to a conclusion. This turned out to be true, in a way.

The Chancellor announced a two-step approach: first, a moderate increase in CGT with immediate effect. So, well done if you got a business sale over the line pre-Budget; a 4% saving is not to be sniffed at! However, step two comes in the form of a reduction to the value of Business Asset Disposal Relief (BADR) after April 2025.

Business Asset Disposal Relief is shrinking

While the BADR reduction is far from catastrophic, it does create some motivation to complete deals before 6 April 2025. After this, the cost will be £40,000 for qualifying shareholders and potentially £80,000 for a married couple when both qualify.

The strategy of holding shares that qualify for Business Relief until you die, getting a tax-free uplift in the base cost and no Inheritance Tax (IHT) is not going to work anymore for shareholdings worth much more than £1m. People in this boat should be considering a new strategy.

There will, no doubt, be some interesting discussions with HMRC over share valuation, and some interesting shareholder discussions when someone inherits say, a 40% shareholding with a chunky IHT liability and no income to pay it in future.

Pensions, death and Inheritance Tax

Similarly, those using pensions as an IHT tool should rethink their options (or die before April 2027). But I think that might be what they call the tax tail wagging the dog.

Expert Tax advice for business owners and entrepreneurs

Consilium has a proven track record of advising successful business owners and entrepreneurs on how best to manage Tax. We provide comprehensive Corporate Tax and Personal Tax services to help you pay the right amount of tax and make the best use of available reliefs and exemptions.

Please contact our Tax partner Craig Coyle to discuss the 2024 Autumn Budget or your tax affairs in general.

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