With thanks to GBNEWS and BDO
An urgent warning has been issued to taxpayers who need to report capital gains on their Self-Assessment returns this year, by accountancy firm BDO.
With the filing deadline now just three weeks away, the firm has highlighted a significant complication arising from mid-year changes to capital gains tax (CGT) rates.
The issue stems from HM Revenue and Customs (HMRC) online Self-Assessment software, which cannot automatically calculate the correct tax liability following rate adjustments introduced during the 2024/25 tax year.
As a result, taxpayers face an increased risk of submitting inaccurate returns and potentially incurring penalties if the correct figures are not entered manually.
Anyone who sold assets during the tax year may need to carry out additional calculations themselves to ensure they pay the correct amount of tax.
The capital gains tax rate changes took effect from October 30 2024, the date of the Autumn Budget.
For basic rate taxpayers, the rate on most asset disposals increased from 10 per cent to 18 per cent. Higher-rate taxpayers saw their rate rise from 20 per cent to 24 per cent.
These revised rates apply to all assets except residential property and carried interest, which continue to be taxed under separate rules.
The fact that the changes were introduced partway through the tax year creates added complexity for individuals who disposed of assets both before and after the Budget date.
In these cases, taxpayers must split their capital gains based on when each disposal occurred to determine which rate applies.
To maximise available relief, any capital losses and the annual exemption should be set against gains made on or after October 30.
HMRC’s self-assessment system continues to calculate Capital Gains Tax using only the pre-Budget rates, meaning taxpayers must override the figures produced by the software.
