With his recent Spring 2023 Budget, Chancellor of the Exchequer Jeremy Hunt has been grabbing the headlines. However, an announcement previously mentioned in his Autumn Statement is about to come into force and may catch taxpayers off guard. The announcement made in his Autumn Statement was that Capital Gains Tax exemptions would be reduced from 6 April 2023, and then further reduced in April 2024.

Capital Gains Tax is a tax which applies when you make a profit (gain) on the sale of an asset. The tax is levied on that gain after all reliefs have been claimed and is payable by the person who disposed of the asset. It applies to individuals, Trustees and Executors.

This change relates to the Annual Exemption. The Annual Exemption is the tax-free amount of gains that can be realised each tax year before CGT is charged. Currently, individuals have an Annual Exemption of £12,300 and trusts have an Annual Exemption of £6,150. This means that any gains up to this level are not taxable. From 6 April 2023, this allowance will be significantly reduced to £6,000 for individuals and £3,000 for trusts. From April 2024 it will reduce again to £3,000 for individuals and £1,500 for trusts. Taxpayers who have never considered CGT as a concern and have always been safely within their Annual Exemption may now find that they have CGT to pay.

The UK Government estimates that approximately 500,000 individuals and trusts will be affected by these changes in the next tax year alone.

If you require advice on your CGT position or any assistance in reporting gains to HMRC, please get in touch.