December Newsletter

Capital Gains Tax – What You Need to Know

If you ever sell (or even part-sell) your business, Capital Gains Tax (CGT) will take a slice of your profit. Smart business owners plan for this before exit, not after.

There are important changes coming to the rates that apply under Business Asset Disposal Relief (BADR) and acting early could save you thousands. Here’s what’s happening:

What’s Changing

• Up to 5 April 2025: Qualifying business gains under BADR are taxed at 10%, with a £1 million lifetime limit per person
• From 6 April 2025: The BADR rate rises to 14%
• From 6 April 2026: It increases again to 18%

What That Means for Your Sale Proceeds

If you sell your business in the next few years and your gain (sale price minus costs) is £500,000:

• Sell between 6 April 2025 to 5 April 2026: You’ll keep around £430,000 after tax
• Sell on or after 6 April 2026: You’ll keep about £410,000

That’s a £20,000 difference (between 14% and 18%) – not exactly small change!

What You Should Do Now

• Get a professional valuation of your business or shares. You can’t plan effectively without knowing where you stand
• Check your eligibility for BADR – structure, share classes and ownership periods all matter
• Keep thorough records of capital injections, improvements and other expenditures… these can reduce your taxable gain

Tax reliefs can (and do) change, so don’t assume today’s rules will hold. Talk to us about building potential rate increases into your exit strategy and protect as much of your hard-earned value as possible.

Claiming Expenses When You Work From Home

If you use your home as an office or workshop, you may be able to claim tax relief for the associated costs. HMRC  will not pay these expenses directly but you can use the allowable amounts to reduce your tax bill.

There are two methods for calculating how much tax relief you can claim:

1.  Simplified Expenses

Using simplified expenses means applying a flat rate based on the number of hours you work from home each month. This removes the need to calculate what proportion of your household costs relate to business use – no more working out the business share of heating, electricity, or other utilities. It’s often a much easier option than apportioning your bills manually.

Important: The flat rate does not include telephone or internet expenses. However, you can still claim the business proportion of these costs separately by calculating the actual usage.

Eligibility for Simplified Expenses

Sole traders and business partners must work from home for 25 hours or more per month to qualify.

Different flat rates apply if:

• You live at your business premises (e.g. operating a B&B)
• You work from home
• You are claiming vehicle costs

These rates are published on the GOV.UK website.

2.  Claiming a Proportion of Your Costs

Instead of using the flat rate, you can calculate tax relief based on the proportion of your home used for business. This method allows you to include costs such as heating, electricity and other running expenses.

Note: Claiming a portion of your council tax, mortgage interest, or home insurance may affect your eligibility for Private Residence Relief, which can reduce Capital Gains Tax when you sell your home. It’s important to understand the potential impact before claiming these expenses.

How to Calculate Proportional Costs

A common method is to divide your home into rooms. For example, if you have five rooms and use one exclusively as an office, you may be able to claim one-fifth of your household running costs.

You can also factor in time. For example, if you work 40 hours per week in your home office out of a total of 168 hours in a week, you are using the room for business for just over 20% of the time.

If you’re considering claiming work from home expenses, do please get in touch with us – our team will be happy to help.

Leadership Support

Is taking on a leadership role stirring up a mix of emotions?

Holding the seat of a leader can bring up doubts, fears and self-limiting beliefs that quietly hold you back. But when you dismantle those beliefs, everything shifts. You can: 

• Unlock your full leadership potential
• Lead with clarity, purpose and confidence
• Inspire your team and drive measurable business results

If this resonates with you and you feel ready for support, our transformational Leadership Support Package is here to guide you. Our leadership module will help you gain: 

• A better understanding of yourself
• Enhanced communication skills
• More energy and motivation
• A better work-life position

Take a moment today to refocus on what truly drives you. Or get in touch, Matt will be happy to help you explore what’s next.

Vantage Tax Fee Protection Cover

You should soon receive your annual renewal or new client invitation letters. These are being sent out by email, directly from Vantage, the service provider.

If you’ve not yet completed your order form, or you didn’t receive the invitation email, please contact jo.lewendon@cvag.co.uk as soon as possible. Please note that the renewal start date is 1 January 2026.

The Vantage Tax Fee Protection Service provides peace of mind by covering the professional fees incurred when responding to HMRC enquiries on your behalf. Tax investigations can be lengthy and complex, often lasting months or even years and the associated costs are not included within our standard annual fees.

Important Deadline Reminder

If we have not yet completed your 2024/25 self-assessment tax return, please be aware that our internal deadline for receiving your information is 19 December 2025. If we do not receive the required details by this date, we cannot guarantee that your tax return will be filed with HMRC on time.

How We Can Help