1000’s of UK buyers may face surprising fines and curiosity prices after HMRC’s on-line self-assessment system did not account for final 12 months’s mid-year improve in capital positive aspects tax (CGT).
In her October 2024 funds, Chancellor Rachel Reeves raised CGT charges on most belongings, lifting the speed for basic-rate taxpayers from 10% to 18%, and for higher-rate taxpayers from 20% to 24%. The brand new charges utilized from 30 October 2024.
Which means liabilities for the 2024–25 tax 12 months depend upon when an asset was bought: positive aspects realised earlier than the funds needs to be taxed on the outdated charges, and positive aspects after needs to be taxed on the increased charges.
Nonetheless, HMRC’s self-assessment platform — finalised earlier than the funds modifications had been introduced — nonetheless applies the outdated charges robotically, leaving taxpayers who depend on it susceptible to underpaying.
Greater than 378,000 folks paid CGT within the earlier tax 12 months, suggesting tens of hundreds may very well be caught out, significantly these finishing their very own returns with out an accountant.
HMRC has warned that these submitting tax returns for 2024–25 shouldn’t depend on the system’s automated calculations and as a substitute use its on-line CGT calculator. The tax authority has already begun sending “nudge” letters to taxpayers who could have miscalculated their payments.
Andy Gibbs, director of companies at TaxAssist Accountants, mentioned: “Now we have been contacted by a number of anxious people who’re rightly involved to obtain these nudges. It’s unlucky that HMRC’s techniques can’t sustain with the speed of change. It’s all too straightforward for folks to pay the mistaken price of tax as a result of the reporting course of just isn’t sufficiently sturdy.”
Errors could not come to mild till January 2026, when most 2024–25 returns are filed, based on the Institute of Chartered Accountants in England and Wales (ICAEW). The problem has been compounded by the halving of the annual CGT exemption from £6,000 to £3,000 in April 2024, pulling extra first-time taxpayers into the system.
Those that fail to amend their returns danger penalties of as much as 30% of tax due if errors are deemed careless, plus late fee curiosity at the moment set at 8%.
Advisers warn the modifications shall be particularly complicated for cryptocurrency merchants, the place excessive transaction volumes make it troublesome to allocate positive aspects to the proper aspect of the funds date.
Gibbs added: “Most individuals need to pay the correct quantity of tax and do the precise factor. However until HMRC makes its techniques extra sturdy, these issues will preserve arising every time charges change mid-year.”
HMRC mentioned it had supplied adequate instruments to assist taxpayers get it proper.
“Self-assessment clients can have the whole lot they should get their tax proper,” a spokesperson mentioned. “These submitting on-line shall be prompted to make use of our CGT calculator, which takes into consideration the mid-year price change and is accompanied by steering.”
Specialists advise anybody promoting shares, property or crypto belongings within the 2024–25 tax 12 months to double-check calculations and search skilled recommendation if unsure.
