The changes to capital gains tax (CGT) rates announced in the 2024 Autumn Budget were accompanied by anti-forestalling measures that generally may apply to the following three categories of transactions:
- Pre-budget disposals with completion dates after October 30, 2024: If an unconditional contract was entered into to sell an asset before October 30, 2024 (budget date), but the transaction was only completed after this date, the anti-forestalling rules could apply such that any gain is subject to CGT at 24%, rather than the 20% that was effective before the budget announcements were made. These rules apply to disposals with gains exceeding £100,000 and cover all asset types, including property, shares, and businesses.
- Share reorganizations and exchanges: If a share reorganization or exchange was carried out between April 6, 2023, and October 30, 2024, and business asset disposal relief (BADR) or investors' relief is claimed, the disposal date for CGT purposes under the anti-forestalling rules will be the date the BADR or investors' relief claim is made, and not the date of the reorganization or exchange itself. This means if the claim is made after the budget date, the disposal will be subject to the new, higher CGT rates.
- Ongoing impact: As the CGT rate applicable to transactions qualifying for BADR will further increase in April 2025 and again in April 2026, ongoing anti-forestalling rules were introduced for transactions entered into during this period.
Note that exemptions can apply in some scenarios in which the transaction has no tax avoidance motive. There are also some exceptions to these rules (e.g., they may not apply to transactions such as capital reduction demergers).
Read a January 2025 report prepared by the KPMG member firm in the UK