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2024/25 Capital Gains Tax Changes Cause Tax Return Errors

07 - 08 - 2025

Mid-year Capital Gains tax changes have led to errors on taxpayers' 2024/25 Self Assessment Tax Returns. 

The Capital Gains Tax rates changed mid tax year in 2024/25 for asset disposals with the exception of residential property sales. In some cases taxpayer are using incorrect tax rates for disposals made on or after 30 October 2024.

 

HMRC are writing to taxpayers, who have declared a disposal made on or after 30 October 2024 on their 2024/25 self assessment tax return, where an error appears to have been made. The letter sent will be one of the following dependent on the circumstances:

 

1.      Letter 1 – the tax return includes an adjustment but it appears to be incorrect;

2.      Letter 2 – the tax return does not include an adjustment and an incorrect rate of capital gains tax appears to have been used.

 

Both letters ask the tax payer to take action within 30 days of the letter.

 

Please do not hesitate to contact us for advice on 01244 625 500 or contactus@foremansllp.com if you do receive one of these letters or need help with any disposals made during the 2024/25 tax year.

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Fixed Data

Assumptions

General                                                                                                                              

• The user is over 21 and subject to tax in the UK
• The user wishes to minimise their tax liability
• The user is subject to national insurance i.e.he/she is not over retirement age
• Only current tax rates and limits are applied
• No tax mitigation payments are made e.g. pension contributions
• Only 3 digit letter 'L' tax codes shown in the drop down list can be entered 
• The user does not have a turnover greater than £100,000 where fewer reliefs and or higher taxes may apply

Expenses

• All miles claimed as expenses are for business use using a personally owned car or van
• All other expenses claimed are wholly, necessarily and where appropriate exclusively for the benefit of the business

Foremans LLP Charges

• Foremans fees associated with Limited Company, Sole Trader or Umbrella are as per published rates
• Foremans current Service Costs are allowed for in all calculations.

Holiday Pay

• Holiday pay is accumulated week by week by Umbrella or Agency employer but paid out during the year

VAT

• Limited Company or Sole Trader will be VAT registered
• Limited Company or Sole Trader will take advantage of Flat rate VAT
• Flat rate applied includes the benefit of the additional 1% applicable to the first year of VAT registration

Limited Company Conditions

• One director / one shareholder in a Personal Service Company
• Director of Personal Service Company elects to vote for 100% dividend after salary, costs and expenses
• Director's salary is maximum salary to the primary threshold for NI
• The Limited Company is trading normally i.e it is not subject to IR35 and is not a Managed Service Company

NOTES

• The Current tax rates are taken from the Fixed Data Table
• The current Value Added Tax Rate is 20% and is applied to all invoices and expenses as appropriate
• The Director's Salary is fixed in relation to National Insurance thresholds. Higher Rate Taxpayers should consider the advantages and disadvantages of a larger annual salary or bonus
• Higher Rate Taxpayers may wish to consider the advantages and disadvantages of shared ownership of their business
• Users with a tax code other than three digits and letter "L" may telephone or email our Development Department to request a detailed calculation
• Generally the use of an Umbrella rather than an Agency payroll is only efficient if sufficient weekly expenses are allowable and claimed
• The expenses claimed under an Umbrella should not prevent the proper operation of National Minimum Wage