Australia’s recent Federal Budget in May 2026 introduced one of the most significant proposed changes to the country’s Capital Gains Tax (CGT) system in more than two decades.
While much of the post-Budget focus in relation to these changes has been on Australian property investors, there’s no doubt that the proposals could affect anyone with investments – and that includes many British expats who have built wealth across multiple jurisdictions.
So, understanding how these changes may affect your financial planning is particularly important.
The changes introduce a new 30% minimum tax on capital gains
Under the current CGT rules, if you hold an asset for more than 12 months, you’re generally entitled to a 50% CGT discount when you come to sell it.
In simple terms, this means only half of the capital gain is subject to tax, at your marginal rate.
The new proposals announced in the Budget replace the 50% discount with an inflation-based indexation system from 1 July 2027.
Furthermore, there will be a minimum tax rate of 30% on your net capital gain after indexation.
At this stage, gains accrued before 1 July 2027 will continue to receive the current CGT treatment, while gains arising after that date will fall under the new rules.
Clearly, these proposals are subject to legislation and will not come into effect until the start of the 2027/28 tax year.
However, given the potential impact, it’s important that you are aware of how the new CGT regime could affect you, and review your long-term financial strategies accordingly.
How the proposed changes could affect you
If you’re a UK expat living in Australia, you may have built wealth across both countries during your working life.
This may include Australian investment properties, share portfolios, and managed funds alongside similar assets in the UK.
The proposed CGT changes may well increase the amount of tax payable on your future investment gains in Australia, particularly if your current plans assume continuation of the current 50% CGT discount.
As a result, your after-tax investment returns may be lower than you have previously expected and planned for.
If you intend to remain in Australia permanently, the changes may become part of the local tax landscape and, as a result, your future investment planning.
However, if you expect to return to the UK in the future, the interaction between Australian tax rules and any subsequent UK tax exposure may require careful consideration.
Depending on the size of your portfolio and your investment time horizon, the cumulative impact of higher CGT liabilities could be significant.
This will enhance the importance of managing your investments effectively to help preserve after-tax wealth.
How the changes could affect your property portfolio
As well as stock market investment, you may also have invested heavily in Australian residential property.
Under the current rules, the 50% CGT discount may have mitigated your tax liability when you sell investment properties.
The proposed changes will likely mean future gains are subject to a higher effective tax rate, particularly during periods of low inflation, when indexation may provide less relief than the current 50% discount.
As a result, if you have a property portfolio, you will want to consider how to manage this as a result of the proposed changes.
For example, if your current plans involve selling property over the next several years, timing may become a significant planning consideration.
Managing your cross-border investments
One of the challenges you face, if you’re a UK expat in Australia, is that many financial decisions you take will often have consequences in both countries.
So, if you are planning to move to Australia, you will need to think ahead about how changes could affect you and your future intentions regarding your investments and how you access your gains.
You may also already be a resident in Australia but plan to return to the UK in the future, or you may have UK-based assets alongside Australian investments. In all these situations, it’s important to realise that changes you may make to your investment and income strategy as a result of these changes could create unintended consequences elsewhere.
Expert advice can help you plan effectively
The CGT reforms announced in the Budget represent a significant change to how investment gains will be taxed from July 2027.
We strongly recommend that you seek specialist cross-border advice when reviewing how these changes may affect you.
As is often the case, starting your review process early will give you a clear idea of the options available to you.
At bdhSterling, we specialise in helping UK expats with all aspects of your financial planning, and can help you understand the implications of the proposed changes and how you can mitigate their effects.
If you would like to discuss your own financial plans, please get in touch with us today.
Please note
The value of your investment can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only; it does not take into account your personal objectives, financial situation, or needs.
Please do not solely rely on anything you have read in this article, and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.
All contents are based on our understanding of HMRC and ATO legislation, which is subject to change.