Although many expect a rise in capital gains tax (CGT) rates to be announced in the October 2024 Budget, data shows that the reduction in CGT rates has increased receipts.

HMRC data reveals that the recent cut in CGT for residential property transactions from 28% to 24%, effective 6 April 2024, may have contributed to a rise in receipts. From April to August 2024, CGT receipts reached £854 million, up from £778m during the same period the previous year.

This trend may reflect a warming property market, with sellers taking advantage of potential interest rate cuts or rushing to sell ahead of a possible CGT hike. Over recent years, the number of individuals paying the top CGT rate of 28% on residential property and carried interest gains has surged. Between 2016/17 and 2022/23, the number of taxpayers paying the top rate more than doubled, from 50,000 to 120,000.

Frozen tax bands, rising mortgage costs, and landlords’ inability to offset interest against rental income have increased buy-to-let property sales. With further changes expected in the Budget, the coming months may see a continued surge in property transactions as individuals try to avoid higher taxes.

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