In the Autumn Statement from the Chancellor of the Exchequer, Jeremy Hunt, today (17th November 2022), it was announced that the capital gains tax (CGT) allowance was being reduced with effect from next year.
Category Archives: Capital Gains Tax
Personal Allowance Freeze for 5 Years
In the budget today (3rd March 2021) the Chancellor of the Exchequer, Rishi Sunak, confirmed the the personal allowance for 2021/22 would increase to £12,570 as had previously been confirmed.
However, he also confirmed that, in order to start to claw back some of the massive spending that needed to happen in order to finance payments during the coronavirus pandemic, the personal allowance would remain frozen at that level until April 2026.
The personal allowance is the amount of money that can be earned before tax is paid. Once the level is passed, anyone who earns over £12,570 will need to pay tax at 20% for the amount of earnings between the personal allowance and the higher rate tax bracket.
In addition to this, the 40% tax bracket starting point, which will be increased slightly to £52,270 on 6th April 2021, will also be frozen for 5 years and will not be increased until at least 2026.
This means that as people start to see pay rises over the coming years, they may be pushed into a situation where they pay more tax or move into a higher tax bracket.
This announcement came alongside confirmation that the furlough scheme will be extended as will the SEISS scheme for the self-employed, plus there will be an extra £20 a week for those on Universal Credit and Working Tax Credit for the first 6 months of the 2021/22 tax year.
The stamp duty holiday will also be extended to the end of June with a partial amount also being available until the end of September.
The Capital Gains Tax allowance was also included in the budget and it was confirmed that this would increase to £12,300 for the tax year 2021/22 and then also remain at that level for 5 years until 2026.
Capital Gains Tax (CGT) Allowance 2019/20
The Capital Gains Tax (CGT) annual exempt amount is the amount of gains that you are allowed to make before paying tax on those profits.
Capital Gains Tax is paid when you sell or dispose of assets such as personal possessions worth more than £6,000, property that is not your main home, shares or business assets.
CGT is based on the amount of profit that you have made, not on the selling price.
Each year the CGT annual exempt allowance is increased in line with the rise in the Consumer Prices Index, rounded up to the next £100.
In 2018/19 the CGT allowance was £11,700.
In 2019/20 this will be increasing to £12,000.
The law also provides that the annual exempt amount available to most trustees of settlements is one half that due to individuals and so this will be £6,000 for the tax year 2019/20.
For details of all current tax rates that we monitor, please see this page.
Capital Gains Tax 2018/19
This is a summary of the Capital Gains Tax Allowance for 2018/19.
Capital Gains Tax (CGT) is payable when you sell something and make a profit on it as well as when you give something away that would otherwise be included in CGT.
Some things are not liable for CGT however and you should check the rules with HMRC for your individual circumstances.
The amount of CGT that is due depends on the profit you make (i.e. the amount you sell it for less the amount you paid for it) and is only payable if it exceeds the CGT allowance for the tax year in which you make the gain.
The CGT Allowance for 2018/19 is £11,700.
This amount has been increased from 2017/18 when the rate was £11,300.
Examples of when Capital Gains Tax is due could be:
- On the sale of a second property
- On the disposal of personal assets that are worth more than £6,000 (although this does not include your car)
- On the sale of shares (that are not held in an ISA)
Obviously if your profits from selling these types of goods/assets is below the allowance then no tax is payable.