Autumn Budget 24: Labour raises CGT lower and higher rates

Chancellor Rachel Reeves has raised the lower rate of capital gains tax (CGT) from 10% to 18%, and the higher rate of CGT from 20% to 24%. (Source: Professional Adviser)

The chancellor’s increases bring capital gains tax (CGT) rates up from the previous 10% and 20% for lower and higher rates, respectively.

In her Autumn Budget on 30 October, Rachel Reeves announced that CGT on residential property will remain steady at 18% and 28%. However, CGT on carried interest will rise to 32% starting in April 2025, up from its current rate of 28%.

This CGT increase follows recent reductions to the tax-free allowance, which has dropped sharply from £12,300 annually in 2022-23 to just £3,000 this year.

Despite the changes, today’s CGT rate adjustments are still lower than previously reported estimates. Earlier this month, The Guardian speculated that CGT rates could rise to between 33% and 39%, though Prime Minister Keir Starmer had dismissed these projections as inaccurate.

Reeves emphasized that “the UK will still have the lowest CGT rate of any European G7 economy.” This CGT revision aligns with Labour’s broader fiscal strategy to address a £22bn budget deficit inherited from the previous Conservative administration, as the party aims to strengthen public finances.

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