HMRC Systems Struggle With Capital Gains Tax Changes, Risking Millions of Wrong Bills

UK taxpayers are facing complex and potentially incorrect capital gains tax (CGT) bills due to HMRC's outdated systems struggling to handle recent policy changes implemented by Chancellor Rachel Reeves. These changes, which increased CGT rates and cut reliefs, took effect immediately after the 2023 Budget, causing discrepancies in tax calculations depending on when asset sales occurred within the tax year. HMRC's self-assessment software currently cannot apply the new rates correctly for the 2024-2025 tax year, meaning taxpayers must manually adjust their returns to avoid underpaying or overpaying. Experts, including those from AJ Bell and tax specialists, warn that the complexity of UK tax legislation, exacerbated by frequent changes, makes errors almost inevitable. While CGT affects a smaller portion of taxpayers selling or gifting assets above £3,000, the risk of miscalculations is significant, prompting warnings for households to be vigilant. HMRC has acknowledged the issue and advises taxpayers to use adjustment calculators and review their filings carefully.