Mid-year rate rises have led to tax return errors due to Capital Gains Tax changes. Understand who is affected, what HMRC letters mean, and how to correct returns. Use HMRC's tool and amend your returns promptly to avoid interest ...
Tax return errors, Due to CGT changes, Mistakes lead to interest
Tax return errors due to Capital Gains Tax (CGT) changes have surged after mid-year rate rises, particularly where disposals occurred on or after the 30th of October 2024 and accounting software did not apply the correct rates.
What changed and when?
From the 30th of October 2024, the main CGT rates for assets other than residential property and carried interest rose from 10% to 18% for basic rate taxpayers and from 20% to 24% for higher rate taxpayers. Disposals before that date keep the earlier rates; disposals on or after that date use the higher rates.
These mid-year shifts often cause tax return errors due to CGT changes when multiple disposals span both periods.Some self-assessment calculations still apply the pre-30th of October rates to later disposals unless a manual adjustment is made.
HMRC has released an online calculator to determine the extra CGT due, but omission or mis-entry of the adjustment is creating tax return errors due to these Capital Gains Tax changes.
So what do the HMRC letters mean?
HMRC is contacting taxpayers who reported affected disposals and appear to have under or over-calculated their CGT liability. One letter flags an incorrect adjustment; another flags no adjustment where one seems needed.
Recipients are asked to respond within 30 days by either amending the return or confirming it is correct; otherwise, interest (and potentially further action) may follow. This campaign is explicitly targeting tax return errors due to CGT changes.
Practical steps to fix issues:
Identify all disposals on or after the 30th of October 2024 that are not residential property or carried interest.
Re-run the figures with HMRC's calculator to isolate the uplift created by the 18% and 24% rates.
Check interaction with income bands, losses, and the annual exempt amount to avoid compounding tax return errors due to CGT changes.
Enter the adjustment on the capital gains pages and amend the return within the 30-day window if required.
Pay any extra CGT promptly to minimise interest; keep evidence of working papers and calculator outputs.
If the original return is correct, contact HMRC using the details in their letter to prevent unnecessary follow-up.
Also watch out for ...
Mixed-year disposals: gains before and after the 30th of October must be calculated using the correct rate for each disposal date.
Rate scope: the increases do not apply to residential property (which has its own 18% and 24% structure) or to carried interest.
Band management: confirm the remaining basic rate band after deducting income and earlier gains, and apply 18% and/or 24% accordingly.
Loss strategy: ensure losses are optimally set against higher-rate gains where possible.
Record-keeping: retain contract notes, completion statements, and computation schedules tying through to the adjustment figure.
By acting early and using HMRC's tools if needed, verifying bands and losses, and amending your returns swiftly, taxpayers can resolve tax return errors due to CGT changes and avoid mounting interest and potential fines.
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
In today's blog post, I'll discuss why tax planning should be boring. Innovative tax strategies can backfire, and policy tweaks often hinder growth and savings. Practical, predictable rules will always beat flashy headlines ....
HMRC will be targeting personal expenditure in business accounts with a new digital campaign and will make more enquiries. It wants clear, consistent apportionment and strong records. You should review your accounts before su...
Did you know it's possible to challenge employer PAYE charges, identify payroll mismatches, and correct your HMRC tax bill? My blog post outlines what information to gather and how HMRC will respond to your dispute ......
HMRC is tightening the rules for employee car ownership schemes from October 2026. It also remains crucial to classify vehicles correctly for tax. This blog post explains both changes and what to do next ......
The final £1 coins featuring our beloved late Queen enter circulation as new King Charles III designs grow in number. Millions are heading for tills, pockets and collections. It's a tangible moment of change in Britain's ever...
The Employment Rights Bill roadmap confirms SSP reform from April 2026. If you're an employer, then take a look to see if your policies, budgets and systems align with the new rules. Wider measures will follow through 2026 an...
Latest reports reveal a troubling trend for UK millionaires, with projections indicating around 16,500 will have left the country by the end of 2025. Driven by tax increases and economic stagnation, this raises concerns about...
Navigating the turbulent waters of Britain's financial landscape, Rachel Reeves must confront some hard truths. Failure to make informed decisions could tank the economy and sacrifice the very economic stability and growth we...
We turn compliance into clients with a simple workflow that converts weekly regulatory updates into informative blog posts. Our AI drafts your blog po ...
The madness of spending billions on AI startups raises alarm over staggering valuations and the implications for society. Many of these companies focu ...
Single Points of Dependency quietly cap growth and depress valuations. My blog post this week explains where they hide, why they harm scale, and how t ...
When I first came up with the idea for my Bookkeeping Buddies Subscription, I was excited and yes, even a little overwhelmed. I knew what I wanted to ...
