Legal News | 15.12.22
Tightening your belt for Christmas? Capital gains tax allowance to be slashed
As part of his Autumn Statement, Chancellor Jeremy Hunt announced that he was reducing the capital gains tax (“CGT”) allowance. The CGT allowance, also called the Annual Exempt Amount, is currently £12,300 but will be reduced to £6,000 from April 2023 and £3,000 from April 2024. But what does this mean for you?
CGT is a tax on the profit when you sell (or give away) certain chargeable assets that have increased in value. These assets include investments and shares (held outside an ISA) and second homes.
You only pay CGT on your overall gains above your CGT allowance. The changes announced by the Chancellor will mean that more people will end up paying more CGT as a result of the lower allowance.
The rate at which you will pay CGT will depend on (a) whether you pay income tax at the basic rate or higher rate, and (b) whether the gain has been made on a residential property or other chargeable assets, such as shares.
If you are a trustee, you will see the CGT allowance reduced from £6,150, as it currently stands, to £3,000 from April 2023 and £1,500 from April 2024. Furthermore, trustees pay CGT at the higher rates: 28% on residential property and 20% for other chargeable assets.
If you have any questions regarding CGT allowances, or you would like to have a better understanding of CGT in general, please do not hesitate to get in touch with your usual contact at Wansbroughs or by contacting us at firstname.lastname@example.org.