CGT is payable when certain items are sold or disposed of. Alongside land and property, which includes second homes and investment properties, capital gains tax can also be due on the sale of Art, Antiques, or shares (held outside of an ISA).
CGT is calculated on the difference between what an item was acquired for and its value when it is disposed of (this can, in many circumstances include when items are gifted). Certain allowable expenses can be deducted when calculating the tax due.
What is the CGT allowance?
- The Annual Exemption Allowance (AEA) for capital Gains tax is £12,300 in the 2022/23 tax year.
- From April 2023 this will reduce to £6,000.
- This will reduce further to £3,000 from April 2024.
This is the tax-free amount a person can receive annually where a capital gain arises before they have to pay CGT.
The Government estimates that in the tax year 2023 to 2024 circa 500,000 individuals and trusts could be affected by these changes, increasing to 570,000 in the following tax year.
By the 2024/25 tax year, the Government estimates that an additional 260,000 individuals and Trusts may be liable for CGT, that otherwise would not have, had these changes have not been implemented.
ISAs will remain unaffected and Private Residence Relief (PRR) on main homes will remain.
Where CGT is not payable, where a gain of at least £50,000 is made, there is still a requirement to report this to HMRC.X