Explaining Capital Gains Tax for New UK Residents 2024

Capital Gains Tax (CGT) can be a complex topic, especially for new UK residents who need to understand their tax obligations in a new country. With changes expected in 2024, it’s crucial to stay informed about the latest rules and regulations. This blog will address the new capital gains rules for 2024, potential changes in CGT, and the specifics of the 9-month rule.

What are the new Capital Gains rules for 2024?

As of 2024, there are several important updates to the capital gains rules in the UK. These changes aim to simplify the tax system and ensure compliance:

1. Annual Exemption Adjustment:
   • The annual CGT exemption amount has been adjusted. For the tax year 2024-2025, individuals can exempt up to £3,000 of their capital gains from taxation, down from the previous £6,000. For trustees, the exemption is set at £1,500.
2. Reporting Requirements:
   • New residents must report their capital gains within 60 days of completing the disposal of an asset. This applies to UK residential property sales only.
3. Digital Reporting:
   • The introduction of a mandatory digital reporting system requires all taxpayers to use HMRC’s online platform for reporting and paying CGT. This change aims to streamline the process and reduce errors.

Is the Capital Gains Tax going to change in the UK?

Yes, the capital gains tax landscape in the UK is evolving. Here are some anticipated changes:

1. Tax Rates:
   • The government has proposed maintaining the current CGT rates. This means higher rate taxpayers will continue to pay 20% on most gains (24% on residential property), and basic rate taxpayers will pay 10% (18% on residential property).
2. Reliefs and Exemptions:
   • There may be revisions to specific reliefs and exemptions, such as Business Asset Disposal Relief (formerly Entrepreneurs’ Relief). It’s essential to stay updated with HMRC announcements to understand how these changes might affect you.
3. Consultations and Future Changes:
   • The government is conducting consultations to assess the effectiveness and fairness of CGT. Future changes might include adjustments to tax rates, exemptions, and reliefs to align the tax system with economic goals.

For the latest updates and detailed information, visit GOV.UK Capital Gains Tax.

What is the 9-Month Rule for Capital Gains Tax?

The 9-month rule is particularly relevant for those selling their main residence. Under this rule:

1. Principal Private Residence Relief (PPR):
   • If you sell a property that has been your main residence at any time during your ownership, the last 9 months of ownership are exempt from CGT, regardless of how the property was used during those final years.
2. Qualifying Conditions:
   • To qualify for this relief, the property must have been your main home. If you have more than one residence, you must make an election to HMRC to determine which property should be treated as your main home.
3. Recent changes:
   • Prior to April 2020, the exempt period was 18 months. The extension to 36 months is for disabled people or individuals moving into a care home for more than three months.

Understanding these rules can help you effectively manage your tax liabilities when selling your main residence.

Stay informed

As a new UK resident, staying informed about the latest capital gains tax rules and potential changes is essential for effective financial planning and compliance. By understanding your obligations, taking advantage of available reliefs, and seeking professional advice, you can navigate the UK tax system with confidence

For tailored advice on managing your international tax obligations, consult our International Services Team. Their expertise can help you navigate the complexities of UK tax regulations.