diff --git a/CHANGELOG.md b/CHANGELOG.md
index 2e9e5cee..cc82495a 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,15 @@
 # CHANGELOG
 
+## v0.4.0
+
+Breaking changes in this release:
+
+* Upgrade to using Ably JavaScript SDK v2 [\#325](https://github.com/ably/spaces/pull/325)
+
+With this release the Spaces SDK now requires Ably JavaScript SDK v2 to be installed and used with the Spaces client. Please refer to [Ably JavaScript SDK v2](https://github.com/ably/ably-js/releases/tag/2.0.0) GitHub release notes for the list of breaking changes and the corresponding migration guide.
+
+**Full Changelog**: https://github.com/ably/spaces/compare/0.3.1...0.4.0
+
 ## v0.3.1
 
 No breaking changes were introduced in this release.
diff --git a/demo/package-lock.json b/demo/package-lock.json
index e126d4cd..0064c36d 100644
--- a/demo/package-lock.json
+++ b/demo/package-lock.json
@@ -41,7 +41,7 @@
     },
     "..": {
       "name": "@ably/spaces",
-      "version": "0.3.1",
+      "version": "0.4.0",
       "license": "ISC",
       "dependencies": {
         "nanoid": "^3.3.7"
diff --git a/package-lock.json b/package-lock.json
index 918d8e4a..974abc5d 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -1,12 +1,12 @@
 {
   "name": "@ably/spaces",
-  "version": "0.3.1",
+  "version": "0.4.0",
   "lockfileVersion": 2,
   "requires": true,
   "packages": {
     "": {
       "name": "@ably/spaces",
-      "version": "0.3.1",
+      "version": "0.4.0",
       "license": "ISC",
       "dependencies": {
         "nanoid": "^3.3.7"
diff --git a/package.json b/package.json
index 18c90331..597d9c29 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@ably/spaces",
-  "version": "0.3.1",
+  "version": "0.4.0",
   "description": "",
   "main": "dist/cjs/index.js",
   "module": "dist/mjs/index.js",
diff --git a/src/version.ts b/src/version.ts
index 02e02a02..95bd727f 100644
--- a/src/version.ts
+++ b/src/version.ts
@@ -1,3 +1,3 @@
 // Manually update when bumping version
-const VERSION = '0.3.1';
+const VERSION = '0.4.0';
 export { VERSION };