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Capital Gains Tax annual exemption more than halved!

The exemption is then set to fall further to £3,000 from 6 April 2024, bringing even more individuals into the charge of CGT.

The Government expect that this measure will yield an additional £420m of tax revenue in 2024/25 rising to £855m in 2025/26.

Capital gains are profits that arise from the disposal of certain assets, properties or investments. In some cases, individuals must pay capital gains tax (CGT) on such disposals.

Examples of assets that may be subject to CGT are:

  • Most personal possessions worth £6,000 or more, excluding your car
  • Property that is not your main home
  • Your main home if you have let it out, during your ownership period, or used it partly for business
  • Shares held outside of tax-free wrappers
  • Business assets
  • Cryptocurrency

How will this affect you?

  • If you expect your capital gains for 2023/24 to exceed the new £6,000 annual exempt amount, there will likely be tax due (subject to brought forward losses or other reliefs).
  • If the gain is in relation to a residential property, you will be required to report the gain, by way of an online submission, to HMRC within 60 days of the sale completion. The tax is also payable within 60 days.
  • Gains on all other assets, which exceed the annual exemption, must be reported on a Self Assessment tax return to HMRC. If you have not previously been registered for self-assessment you will need to inform HMRC by 5 October following the end of the tax year that you are within the Self Assessment requirements. The tax return must then be submitted and the tax paid by the following 31 January.
  • Penalties will apply for late submissions and late payments.

It should be noted that the UK CGT system can apply to gains realised on overseas assets, including properties, even in instances where tax has been paid overseas.

The next step

If you require any assistance in calculating and disclosing your capital gains, or if you are concerned that you may have failed to make the appropriate disclosure, please get in touch with Sarah Whalley on s.whalley@uhy-manchester.com, or Joe Stuart on j.stuart@uhy-manchester.com
 

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