Account for Capital Gains Tax Rate Changes Properly Or Face Penalties

If you sold shares, a second home or any other investment during the 2024/25 tax year, your Capital Gains Tax (CGT) return may need more care than you realise. A quiet change to CGT rates partway through the year means that thousands of taxpayers risk paying the wrong amount of tax and are now at risk of penalties.

For most people, the problem will only become visible when they submit their Self Assessment Tax Return on or before 31 January 2026, which is now a little more than two weeks away.

The Capital Gains Tax Rate Hike You Might Have Missed

On 30 October 2024 (the date of the 2024 Autumn Budget), the government increased the main rates of Capital Gains Tax for most assets. For gains realised on or after that date, basic-rate taxpayers now pay 18% instead of 10%, while higher-rate taxpayers pay 24% instead of 20%. The old rates still apply to disposals made before that date, though.

That creates an unusual situation: a single tax year now contains two different CGT rate regimes. If you made gains both before and after the change, the tax on each part must be calculated separately and then combined.

This would not have been a big problem if HMRC’s tax return system handled it automatically. But unfortunately, it doesn’t.

Why HMRC Won’t Tell You You’re Underpaying

When you complete the capital gains section of your Self Assessment Tax Return, the system applies a single set of CGT rates to your total gains. It does not know whether you sold assets in May 2024, December 2024 or both. Unless you intervene, it will calculate the tax as if all gains were taxed at the old rates.

That means anyone who sold assets after 30 October 2024 risks underpaying tax unless they make a manual adjustment.

This is why tax professionals have described the change as a “banana skin” for self-filers. The return can look complete, and HMRC may accept it, but the tax calculation will still be wrong and you will be penalised at a later date.

Which Taxpayer Groups Are At Risk?

You do not need to be a wealthy investor to fall into this trap. Anyone who disposed of assets after the rate change is at risk, including people who:

• sold shares or investment funds
• sold cryptocurrency
• sold a second property or Buy-to-Let
• transferred assets that triggered a capital gain

Even modest gains can be affected. A few thousand pounds of gains taxed at 18% instead of 10% may not sound dramatic, but HMRC treats any underpayment as a serious offence and could begin an investigation, or worse.

What HMRC Expects You to Do

HMRC is aware that its system cannot handle the mid-year rate change on its own, so it has issued guidance telling taxpayers to calculate a manual “CGT adjustment”.

In simple terms, you must work out how much extra tax is due on the portion of your gains that arose after 30 October 2024 and then enter that figure into a special adjustment box on the tax return.

To help with this, HMRC has published an online Capital Gains Tax adjustment calculator for the 2024/25 tax year. You enter your disposal dates, gains, losses and income level, and it calculates the extra CGT due because of the higher rates.

That figure is then added to your return, ensuring that the total tax bill reflects both the old and new CGT rates.

What Happens If You Submit the Wrong Figures?

If you submit your Self Assessment Tax Return without making this CGT adjustment, HMRC may initially accept it, but that does not mean it will not take any action. When HMRC later identifies that too little CGT was paid, it can charge interest and, in some cases, penalties.

This risk is not hypothetical. HMRC routinely runs compliance checks on capital gains, especially where market data or property records indicate a disposal has taken place.

The safest approach is to take the initiative yourself to make sure the figures are right before the 31 January 2026 submission.

What If You Have Already Filed Your Tax Return?

If you have already filed your 2024/25 return and included capital gains, it is still worth checking whether any of your disposals took place after 30 October 2024.

If they did, and no adjustment was made, you can amend your return to correct the CGT calculation. This is far better than waiting for HMRC to discover the error.

Conclusion

The mid-year rise in Capital Gains Tax rates has created one of the most awkward Self Assessment traps in recent years. Nothing on the tax return screen tells you that anything is wrong, yet the default calculation can be incorrect for a huge number of people.

If you sold assets in 2024/25, especially after October, it is essential to check whether the new rates apply to you and whether an adjustment is required. A few minutes spent getting this right now could save you money, stress and potential penalties later.