Capital Gains Tax changes
Amongst a myriad of influential financial changes, the recent Autumn Statement proposed to reduce the capital gains tax annual allowances.
At present and for the remainder of the 2022/23 financial year, each individual is entitled to make capital gains of £12,300 before being subject to a tax charge. For example, were you to make £15,300 of gains in this financial year, you would only be taxed on the excess over and above £12,300 – i.e., £3,000 (and the rate of that tax would depend on the type of asset that yielded the gain).
This allowance had been rising incrementally each financial year over the past decade – but the recent announcement has bucked that trend entirely. It is proposed that the capital gains tax allowance for the 2023/24 financial year will be £6,000 and further that it will be reduced for the 2024/25 financial to £3,000. By halving the allowance twice in succession, the tax charges on those capital gains for individuals will increase dramatically and in a way that may warrant in depth review.
You can make a capital gain in various ways, though most commonly this includes a sale of a second property, sale of stocks and shares, sales of assets in an estate administration and even gifting certain assets. With the looming deadline of April 2023, we would be happy to advise on your available estate planning options.
Thomas Woodlee is a solicitor in the private client team at Barker Gotelee, Solicitors in Ipswich.