Rules, Exemptions and Allowances
The capital gains tax allowance for the 2023/24 tax year has decreased by more than 50% from its 2022/23 threshold of £12,300 to £6,000. This annual exempt amount is set to halve again to £3,000 in 2024/25.
This means that any individual who makes gains on assets over the value of £6,000 this tax year will be required to pay capital gains tax on the excess amount at their marginal tax rate.
Married couples and civil partners each have a £6,000 exemption, with gains above this usually taxed at a rate depending on their income levels and the type of asset.
Similarly, if you jointly own an asset with another person, you can use both of your allowances to double the exempt amount available (£12,000) before capital gains tax is due.
Where taxable income is less than the UK basic-rate limit of £37,700 (the roof of the basic rate for income tax minus your personal allowance) the capital gains tax rate for most gains up to the remaining basic-rate band is 10%. After this, it rises to 20%, while the standard rate for a trust is 20%.
Gains from the sale of residential properties that are not your main residence are taxed at rates of 18% in the basic-rate band and 28% in the higher or additional-rate bands.
The rate usually applicable to disposals of residential properties by trustees is 28%.
Have you used your £6,000 annual exemption? This will decrease to £3,000 in 2024/25, so use your tax-free allowance while it’s more generous.
Key Considerations
- Have you used your £6,000 annual exemption? This will decrease to £3,000 in 2024/25, so use your tax-free allowance while it’s more generous.
- What can be saved by maximising family member tax-free exemptions?
- To utilise the spouse annual exemption, should you put an asset into your joint names before selling it?
- Do you have other assets that you can used to reduce your gains by creating a capital loss?
- If a negligible value claim can be made on any shares you hold, they do not need to be sold to create a capital loss to offset against any gains made in the tax year.
- If tax is owed, can you defer or rollover the gain, for example by investing the proceeds into a SEIS-eligible investment?
- Have you made a main residence election?
- Did you know that you must report and pay any capital gains tax on the sale of additional UK residential property within 60 days of completion?
- There are a number of reliefs that can help to reduce your capital gains liability, such as business asset disposal relief and principal primary residence relief.
Year-End Tax Guide 2023/24
If you would like to access our full year-end tax guide, simply click here to view the PDF.
Alternatively, you can view an area specific mini blog from the list below:
1. Personal Allowances and Reliefs
2. ISAs
5. Property Tax
6. Business Asset Disposal Relief
8. Tax-Efficient Staff Benefits
10. VAT
11. Penalties
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