New CGT Anti-Forestalling Measures
8th April 2025
With the Capital Gains Tax changes that were bought in during the Autumn Budget (30th October 2024) the government announced anti-forestalling measures to stop taxpayers pre-empting the increase in Capital Gains Tax by using unconditional contracts to use the previous lower rates of Capital Gains Tax.
These changes will cover all asset disposal types including shares, businesses and property disposals.
Usually when an asset is disposed under an unconditional contract the Capital Gains Tax is due at the previous tax rates on the date that the contract is signed and not when the asset is transferred.
However, with the new anti-forestalling rules in place this means that an unconditional contract signed before the budget day but where completion took place after the budget day then the new higher Capital Gains Tax rates would apply unless these criteria were met:
- The taxpayer confirms in their return that the contract was not entered with the purpose to secure the lower Capital Gains Tax rates. And
- Where the parties to the contract are connected the disposal was wholly for commercial purposes.
Usually, self-assessment has made the requirement of taxpayers to take accountability of their own tax affairs, however, if you wish to use the previous lower Capital Gains Tax rates for a contract of this nature you will need to provide HMRC with evidence that the contract meets these criteria.
Business Asset Disposal Relief (BADR) and anti-forestalling:
During the budget it was also announced that the government will be increasing the tax rates of BADR over the next two tax years from 10% to 14% from 6th April 2025 and then again from 14% to 18% from 6th April 2026.
The ongoing anti-forestalling rules will be applied to any transactions that are entered within this time frame where Capital Gains Tax will be charged at the current tax rate on completion of the disposal and not on the date of the contract exchange.
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Disclaimer - All information in this post was correct at time of writing.
