Taxpayers completing their self-assessment returns are facing the risk of financial penalties due to a critical error in HM Revenue and Customs' (HMRC) own online calculator. The tool has not been updated to reflect a significant increase in Capital Gains Tax (CGT) implemented by Chancellor Rachel Reeves, potentially leading to widespread miscalculations.
Budget Change Creates Calculator Chaos
The root of the problem lies in the 2024 Autumn Budget, where Chancellor Rachel Reeves announced a hike in Capital Gains Tax rates. However, HMRC has confirmed to The Telegraph that its primary self-assessment tax calculator is still using out-of-date information and does not incorporate this mid-year change. This leaves individuals who disposed of assets like shares or second properties in the latter part of the 2024/25 tax year at particular risk of underpaying.
Despite the outdated system, a Government spokesman insisted that taxpayers have "everything they need" to calculate their bill correctly. HMRC directed online filers to a separate CGT calculator designed to handle the rate change, accompanied by specific guidance.
Experts Warn of Widespread Risk and Hidden Motives
Financial experts have raised alarm about the potential scale of the issue. Charlene Young, a savings and investments expert at platform AJ Bell, highlighted the danger. "Depending on how many people will have made gains in the second half of the tax year, there’s a real danger here," she said. "More and more people are being dragged into the CGT net, so this will become more of a problem."
Young also suggested the failure to update the main calculator might not be an oversight but part of a broader shift. "It’s an indication of their moves towards Making Tax Digital (MTD) – they’re trying to move people on to third-party software that they’ll have to pay for," she argued. "If you’re going to mothball your own tax software at some point in the future, please be open about that."
What Taxpayers Need to Do Now
The situation creates a clear burden of responsibility for anyone completing a self-assessment return that includes capital gains. Relying solely on HMRC's main calculator could result in an inaccurate submission and subsequent fines for underpayment.
Key steps for taxpayers include:
- Being aware of the date of any asset disposal – whether it was before or after the Autumn Budget announcement.
- Using HMRC's dedicated CGT calculator for gains, not the general self-assessment tool.
- Carefully reviewing the supplementary guidance provided by HMRC on how to apply the new rates.
- Double-checking all calculations before submission to avoid penalties.
With the CGT allowance now significantly lower, catching far more people than in previous years, this technical failure by HMRC's systems poses a tangible financial threat to a growing number of savers and investors across the UK.
