In the Autumn Statement on November 17th, the Chancellor announced that the allowance available to taxpayers liable to Capital Gains Tax will be reduced from £12,300 to £6,000 from April 2023 and £3,000 from April 2024.
Capital gains tax is payable when you sell or gift certain items. These can include assets such as land and property including second homes or shares held outside of an ISA or PEP.
Capital Gains Tax is calculated on the difference between what you paid for an item when it was acquired and its value when it is sold or gifted. (There are expenses that can be deducted from this figure before the tax is calculated)
From this figure you can deduct the annual allowance as a tax-free sum before the tax is calculated. For a jointly owned asset held by a couple, this has meant that no tax was payable on gains of the first £24,600. This is to reduce to £12,000 from April 2023.
If the rate at which you pay Capital Gains is 10% this will mean an extra tax of £630 or £1260 if you pay at 20% per person. (Rates vary depending on your other income in the year) For residential property, the rates are 18% and 28%.
If you are planning to sell or gift any assets in the near future, you may wish to consider timing the ‘disposal’ of your assets before the Capital Gains Tax allowance is reduced.
If you need help calculating potential gains or the timing of your disposals please get in touch with us at Maynard Johns Chartered Accountants where we will be more than happy to help.
We have more information available on Capital Gains Tax via the links below: