It can be difficult to stay up to date on the current tax situation given the number of statements and “mini-budgets” that have occurred recently, all of which have changed rates and allowances. Let us hope that things settle down into something approaching normality now.
This blog deals with changes to Capital Gains Tax (CGT) allowances on the 17th November which will come into force in April 2023. It will impact individuals and trustees. CGT is a tax on profit made on the disposal of an asset, but part of that profit is tax free thanks to an annual exemption, and it is that exemption which will be significantly reduced from April.
The current annual exempt amount for the tax year ended 5th April 2023 is £12,300.
For the tax year ended 5th April 2024, this amount will be more than halved to £6,000 and for the year ended 5th April 2025 reduced to £3,000.
Trustees currently (and with some exceptions) have one half the exempt amount of an individual - £6,150.
For the tax year ended 5th April 2024 this will be cut to £3,000 and for the year ended 5th April 2025 reduced again to £1,500.
Changes to CGT were anticipated in this budget, but most commentators thought it more likely to be a change in rates payable rather than the annual allowances.
Clearly, anyone thinking of disposing on an asset would be well advised to consider doing so before the end of this tax year to minimise the tax bill if that is possible.
If you would like to discuss the impact of this impending change, please do not hesitate to contact a member of our tax team details of which are below or email Partner Giles Scott, Head of Private Client on firstname.lastname@example.org