The higher rate of capital gains tax (CGT) for residential property disposals will be cut from 28% to 24% from 6 April 2024.

The lower rate will remain at 18% for any gains that fall within an individual’s unused basic rate band.

The 24% rate is only payable on disposals of non-exempt dwellings.

The annual exempt amount will be lowered as planned from £6,000 to £3,000 from 6 April 2024.

CGT is usually only payable on disposals of non-permanent residences such as buy-to-lets, second homes and holiday lets. This measure is designed to encourage earlier disposals of second homes to increase the housing stock available to buyers looking to move home or get onto the property ladder.

Most residential property sales will be covered by private residence relief (PRR) so no CGT will be payable.

The 18% and 28% rates of CGT that apply to gains in respect of carried interest will remain unchanged.

If you are considering disposing of residential property that does not qualify for PRR, we can help you calculate any CGT due.