John Kean, a private client tax partner based in the Edinburgh office of Azets, is urging business owners to review their tax returns for the last financial year and double check their numbers reflect the post-Budget changes to Capital Gains Tax.

He explained: “Before the changes to Capital Gains Tax in the Budget last year there was a whirlwind of sales and M&A activity as entrepreneurs and company directors sought to avoid being hit by high penalties. Although the changes weren’t as high as initially feared, there was still a jump from previous rates.

“However HMRC did not update their software before the change was introduced, so anyone who files their tax return could have an incorrect tax calculation if it had been calculated by the old software and will be at risk of underpaying as a result.”

HMRC can issue penalties for returns which have been incorrectly submitted, with the expected fine potentially up to 30% of the extra tax which is due. HMRC has launched a calculator to help taxpayers work out whether they need to make an adjustment to their tax returns.

Mr Kean added: “To use HMRC’s calculator, you’ll need to have a number of details to hand: the date of disposal, the amount of gains made, taxable income for the tax year, capital losses for the current and previous tax years, and details of any pension or Gift Aid payments for the tax year.  

“The results of the calculations will need to be added as an attachment to the 2024/2025 return. This is due by 31 January next year. I’d urge anyone who is affected by the changes to explore their options now, so they can save time, stress and eliminate the risk of being fined for an accidental underpayment.”