Autumn Budget 2025: Implementing changes to capital gains tax

With the upcoming November Autumn Budget there has been speculation regarding potential changes to capital gains tax (CGT).

If any changes are announced, the manner of their implementation can be almost as important as the change itself. In this article, we’ll summarise how some of the more recent CGT changes were implemented and consider what this might mean for the Autumn 2025 Budget.

Forms of implementation

CGT policy implementation can be broadly divided into three categories:

Retrospective implementation

These are changes that can affect the tax treatment of disposals that have already occurred. Introducing CGT changes with full retrospective impact is very uncommon, as many would consider it unfair to change the tax treatment of a disposal after it has happened; CGT is often a material factor when deciding the terms of a transaction, for example. Nonetheless, anti-forestalling measures have impacted some transactions (or elements of transactions) that occurred prior to previous Budgets.

Immediate implementation

These are changes that are effective from the date of the Budget at which they are announced. For CGT, this is quite common, as in the case of rate rises or relief restrictions, it prevents taxpayers from transacting at lower rates or with the benefit of more generous reliefs. Changes implemented immediately will often have associated anti-forestalling provisions, to prevent taxpayers from using the changes to their benefit.

Future implementation

These are changes that will take effect from some date in the future, often the start of the next tax year or a later tax year. This gives taxpayers an opportunity to transact under the current rules, before the changes take effect. There are various reasons for adopting this approach, for instance to ease the administrative impact of calculating or reporting CGT liabilities, to allow HMRC’s systems and process to be updated and to incentive accelerated disposals to generate a short-term spike in CGT revenue.

CGT changes

Change of main CGT rates

At the Autumn Budget 2024, changes to the main rates of CGT were announced, with the lower and higher rates of CGT increased to 18% (from 10%) and 24% (from 20%) respectively. These changes were effective immediately from the date of the Budget; so taxpayers did not have the chance to transact in advance of the announcement of the changes, and any taxpayers trying to make a last-minute transaction on the day of the Budget would have been caught by the new rates.

When increases in rates are announced for future (rather than immediate) implementation, this can lead to the acceleration of planned disposals and a bumper CGT take for HMRC. Taxpayers may also transact in advance of a Budget (if possible), if they fear that rate increases could be announced with immediate effect. Transacting in this matter comes with some risk, as the feared changes may not materialise, the taxpayer may crystallise tax liabilities earlier than they otherwise would have and could end up in a worse position than if they had done nothing at all.

The 2024 rate increases were subject to anti-forestalling provisions whose effect, very broadly, was to allow transactions to which the taxpayer was already committed to proceed at the previous lower rates, but to impose the new higher rates on transactions where the taxpayer had the ability to revoke the transaction.

An example of this is in relation to unconditional contracts for disposals. The default position is that when considering an unconditional contract, the disposal date for CGT purposes is the date that the contract is made rather than the date that it is completed.

The anti-forestalling measures meant that when an unconditional contract was entered into before 30 October 2024 but not executed until on or after that date, the provisions fixed the disposal date at the date of completion, with CGT charged at the applicable rate(s) at that date. This treatment applied unless the taxpayer could make a declaration that no purpose of the transaction was to seek to gain a tax advantage by timing, and if the disposal was between connected persons, that the contract was wholly entered into for commercial reasons.

CGT annual exempt amount

At the Autumn Budget 2022, it was announced that the annual exempt amount for CGT was to be reduced to £6,000 (from £12,300) effective from 6 April 2023 and then further reduced to £3,000 from 6 April 2024. This allowed taxpayers a window of a few months to transact and utilise their 2022-23 annual exempt amount at the previous, more generous level.

Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) – changes to rates

Please see our insight articles on BADR and IR for commentary on the basic conditions for these reliefs.

At the Autumn Budget 2024, it was announced that the CGT rate applicable to BADR gains and IR gains was to be increased. The implementation for this change was in two steps:

• Increased to 14% (from 10%) effective from 6 April 2025.
• Further increased to 18% effective from 6 April 2026.

This gave taxpayers time to crystallise qualifying gains before the changes took effect. Anti-forestalling measures were also introduced to ensure that taxpayers could not gain a tax advantage arising from electing to crystallise BADR or IR-qualifying gains on certain corporate reorganisations.

BADR and IR – changes to lifetime limit

At the Autumn Budget 2024, the lifetime limit for IR gains was reduced from £10 million to £1 million with immediate effect, for disposals arising from that Budget date onwards. The higher lifetime limit remained in respect of disposals that had taken place before the Budget date. For the purposes of determining how much of a taxpayer’s lifetime limit remained, previous IR-qualifying disposals were simply counted against the new reduced limit.

This mirrored the manner of the reduction in the BADR lifetime limit announced at the Spring Budget 2020, when the lifetime limit for that relief was also reduced from £10 million to £1 million with effect for disposals from that Budget date of 11 March 2020.

Both changes were subject to anti-forestalling measures concerning unconditional contracts where the date the contract was made and the completion date of the contract straddled the Budget date, and also with regards to crystallising gains on certain corporate reorganisations.

In line with the downwards trend in the generosity of BADR and IR in recent years, these reliefs could both be candidates for reform or repeal in the next, or future, Budgets; they both add complexity and some, including professional bodies, have questioned whether they truly encourage entrepreneurship.

Carried interest gains

The Autumn Budget 2024 also brought the announcement of an increase in the rate of CGT paid on certain carried interest gains; rising to 32% effective from 6 April 2025.

A further change will affect these gains from 6 April 2026, from which point they will be subject to income tax rather than CGT, although subject to a partial relief such that the overall rate of tax is around 34%.

As the taxation of carried interest is a highly specialist and technical area of taxation, the government opted for future implementation for these changes to allow for consultation with stakeholders before implementation.

Conclusions

It’s widely expected that tax rises will be announced on 26 November and CGT may be targeted. The trend in recent years has been towards higher rates and less generous reliefs, and it’s possible this will continue, alongside new incentives for investment in UK business.

It’s possible that any CGT measures announced could be put in place with retrospective, immediate or future effect, though retrospective changes are considered less likely as they don’t provide the predictability and stability essential to taxpayers.

Taxpayers who understand both the detail of any CGT announcements and the method of implementation will be best placed to navigate CGT changes successfully. Those taxpayers who have CGT disposals planned in the near future may wish to take advice now to understand the impact of potential changes, and allow them to prepare accordingly.

With a fiscal gap in the tens of billions, CGT changes are not expected to be the only revenue-raising measure, given the government’s estimates of the effect of CGT rate increases.

Please get in touch with your Saffery contact as soon as possible if you wish to discuss your tax position in advance of the Budget, either in relation to CGT or more widely. Alternatively, contact Adam Kay or Simon Love.