Taxpayers warned to take extra care reporting CGT ahead of Tax Return deadline

A mid-year increase in the rate of capital gains tax in 2024 means HMRC’s online self assessment software cannot make calculations automatically

The hike in capital gains tax (CGT) at Labour’s first Budget in 30 October 2024, effective immediately, walked into the familiar problem of HMRC not updating software mid-year to reflect rate changes.

This means that a special calculation of CGT liability across the split year needs to be calculated manually and then entered in box 51 of the CGT summary pages on the self assessment tax return.

Taxpayers who have sold assets including shares, second homes and crypto, and so forth, after 30 October 2024 will have to calculate how much tax needs to be paid when completing their self assessment tax returns, rather than the usual automatic calculation performed by the HMRC software.

HMRC warned: ‘People who have sold assets after 30 October 2024 need to be aware of changed rates of capital gains tax for the disposal of assets when completing their self assessment tax return as it won’t automatically calculate the correct amount of capital gains tax due.

‘Instead, they may need to work out an adjustment to the tax automatically calculated using the adjustment calculator on gov.uk.’

Essentially anyone who has sold assets in the six-month period from 30 October 2024 to 5 April 2025 should check very carefully to make sure they do not end up with an HMRC penalty or worse.

The main rates of capital gains tax (CGT) increased to 18% for basic rate taxpayers and 24% for those paying higher rates on 30 October 2024. The chancellor’s decision to impose the tax rise immediately on the day of the Budget was to stop potential tax planning to avoid the higher rate. But then HMRC did not update its software to take account of the mid-year rate change creating the problem for self assessment taxpayers.

Commercial software providers are likely to have taken the change into account and updated their filing software accordingly, although this is not a given so needs to be checked before preparing a tax return.

But HMRC clearly has not made the update which could have allowed for automatic calculations. Taxpayers are advised to be very careful when preparing their tax returns.

Looking for advice? Check out our full range of services. From payroll help to taxation advice, our expert team is available to lend a hand.