Capital Gains Tax: Reducing The Annual Exemption Amount

The UK government announced adjustments to the Capital Gains Tax (CGT) annual exempt amount (AEA) in the Autumn Statement 2022. The changes will affect individuals, personal representatives, and trustees of settlements who realise gains subject to CGT ...

The policy's primary objective is to help the government achieve its goal of placing the public finances on a sustainable path. It will also ensure fairness in tax contributions.

"For tax year 2023-2024, the AEA will be £6,000 for individuals and personal representatives, and £3,000 for most trustees!"

However, for the tax year 2024-2025 and subsequent years, the AEA will be permanently fixed at £3,000 for individuals and personal representatives, and £1,500 for most trustees. The measure also sets the CGT proceeds reporting limit at £50,000.

The AEA changes will have a significant impact on those liable to pay CGT, especially individuals and trusts with gains exceeding the current AEA. The highest CGT rate of 28% will result in a maximum additional tax of £2,604, while the lowest CGT rate of 10% will result in a maximum additional tax of £930. Trusts are liable for half of this amount.

By reducing the AEA, it is estimated that for the year 2023-2024, around 500,000 individuals and trusts per year could be affected.

If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.