Autumn Budget | Commercial Property Update

On 30th October the Chancellor of the Exchequer, Rachel Reeves, presented the first Budget to be delivered under the new Labour government. The uncertainty around any proposed change to the Capital Gains Tax (CGT) rates and reliefs created a flurry of activity prior to the Autumn Budget aimed at getting deals over the line in advance of 30th October to secure the previous rates.

CGT is a tax charged on the profit made from the sale of assets (e.g. investment or business property) that have increased in value and is paid by individuals and some business owners.

The increase in rates is not necessarily as severe as some had feared (which may be because the government realise the need to encourage investment to drive growth) but the changes generally take immediate effect and therefore any opportunity to secure the previous rates has now passed.

The government has confirmed on commercial property disposals made on or after 30th October 2024 CGT will rise for lower rate tax payers from 10% to 18% and for higher rate tax payers from 20% to 24%, bringing the rates in line with residential property which remain unchanged at 18% and 24% respectively.

In addition, CGT realised on disposals made under unconditional but uncompleted contracts entered into before 30th October 2024 and completed after will be charged at the new CGT rates, so even if an unconditional sale contract has been entered into before this date it is possible, when the sale actually completes, that the disposal will still be charged at the new rates, unless:

• the parties to the contract can demonstrate that they did not enter into the contract with a purpose of obtaining a tax advantage by reason of the timing rule in section 28 of the Taxation of Chargeable Gains Act 1992; or
• where the parties to the contract are connected, that the contract was entered into for wholly commercial reasons.

Where either of the above apply a statement must also be made where the gain exceeds £100,000.

This also applies for Business Asset Disposal Relief and Investors’ Relief disposals, where a contract is made from 30th October 2024 to 5th April 2026 and completed from 6th April 2025.

Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) and Investors’ Relief which offer CGT relief to entrepreneurs and investors in businesses remain, however the rate of tax will be increasing from 10% to 14% for disposals made on or after 6th April 2025, and then from 14% to 18% for disposals made on or after 6th April 2026.

If you need support with your commercial property, contact our team today for advice you can count on.