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.
If anything I've written in my blog post resonates with you and you'd like to discover more of my thoughts about mid-year CGT rate changes causing tax return errors, or maybe you're unsure your latest returns are correct, then do call me on 01908 774320 and let's see how I can help you.
Don't forget to stay updated with our daily social media posts on Facebook.
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.
What are the company car taxable benefits for 2025/26? Well, with CO2 bands, list price rules, and future rate rises, this is a clear, upbeat take on HMRC changes. Use it to plan your company cars and electric vehicles with c...
AI speeds up data capture and checks, while accountants provide guardrails. Use both to prepare your tax return with fewer errors and less hassle. It's efficient, affordable, and grounded in human oversight ......
I'm uneasy after Reeves' pre-budget speech because tax rises are definitely on the agenda now. So what might change - from Income Tax to frozen thresholds - and why? If you've a payslip or a mortgage, or even just a weekly fo...
Here's why you should check simple assessments and how to do it with confidence. Spot errors, fix them fast, and avoid overpaying. You'll know when to contact HMRC and what to do next ......
The Autumn Budget 2025 could rebalance taxes without denting pay packets. If the Chancellor implements sensible reforms, they could raise revenue, boost growth and increase overall business confidence. It's a pragmatic path t...
Curious about the HMRC R&D tax relief tool? Here's how it clarifies eligibility, reduces risk, and supports better claims. It's a pragmatic boost for research and development ......
Here's a clear path to sustainable economic growth: stable rules, simpler taxes, and targeted investment. It shows how government policy can unlock business growth. It's optimistic, practical, and focused on outcomes ......
Wondering if you need to file a self-assessment tax return for 2024/25? Here's what's changed, who must file, and when to act. Stay ahead, avoid penalties, and keep things simple ......
Considering Relocating To Milton Keynes? Short Stay: MK offers flexible accommodation solutions, making your transition easy while you explore your ne ...
Imagine setting out on a mountain climb without a map or destination in mind. The path feels uncertain, the terrain unfriendly, and doubts creep in at ...
Here's how small businesses waste time without even noticing, and how a Virtual Assistant fixes it. Expect calm inboxes, smoother workflows, and bette ...
I recall a fellow attendee at my first sales training course, when I was preparing for my own transition from employee to consultant. She confided in ...
