6 March 2024
If you are covering the new capital gains tax rate on property announced at the Chancellor’s spring budget, please see the following comment from Shaun Moore, tax and financial planning expert at Quilter:
“The government has announced a reduction in the higher rate of capital gains tax (CGT) on property from 28% to 24%. This is a welcome relief for those who own a second home or an investment property and plan to sell it in the next year.
“This means a higher-rate taxpayer making a gain of £20,000 on their second home will pay £4,080 in CGT, after deducting the £3,000 CGT allowance. This is £680 less than what they would have paid under the previous regime, which would have charged them £4,760.
“However, the new rate does not apply to the entire gain if it straddles the basic rate and higher rate bands. For example, someone who earns £45,000 and makes a gain of £20,000 on their second home will pay £3,763 in CGT, after deducting the £3,000 CGT allowance. This is because they will pay 18% on the portion of the gain that falls within the basic rate band (£5,270) and 24% on the portion of the gain that falls within the higher rate band (£11,730).
“The government hopes that this measure will stimulate the property market, however with the abolition of holiday letting regime, for some it will be a case of robbing Peter to pay Paul.”
