Capital Gains Tax

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Capital Gains Tax Allowances, Liabilities & Reliefs

In the tax year 2023/2024, an individual's CGT allowance is £6,000 (2022/23 - £12,300).

This means you do not have to pay tax on gains from buying and selling shares or other investments during the tax year up to that amount. You do not normally have to pay tax on any gain you make when you sell your main residence.

	2023/2024	2022/2023
For standard rate taxpayers⁽¹⁾	10%	10%
For trustees and higher/additional rate taxpayers⁽¹⁾	20%	20%
Annual exempt amount - individuals	£6,000	£12,300
Annual exempt amount - trusts	£3,000	£6,150
Business asset disposal relief: lifetime limit on qualifying gains	£1,000,000	£1,000,000
Rate on gains subject to business asset disposal relief	10%	10%

(1). These rates do not apply to transactions involving residential property (the sale of second homes) or carried interest (the share of profits or gains that is paid to asset managers). CGT rates for these transactions remain at 18% (standard rate taxpayers) and 28% (higher rate taxpayers).

If you have used your CGT allowance, don't forget your Individual Savings Account (ISA) allowance. Both a 'Cash ISA' and a 'Stocks and Shares ISA' can shelter capital gains on investments, for example unit trust holdings, worth up to £20,000 per year.

From 6th April 2008 Taper Relief was removed and a new relief called 'Entrepreneurs' relief' was introduced to reduce the Capital Gains Liabilities on the disposal of certain business assets.

CGT is a tax on capital 'gains'. If when you sell or give away an asset it has increased in value, you may be taxed on the 'gain' (profit). This doesn't apply when you sell personal belongings worth £6,000 or less or, in most cases, your main home.

When do I have to pay CGT?

You may have to pay CGT if, for example, you:

sell, give away, exchange or otherwise dispose of (cease to own) an asset or part of an asset
receive money from an asset - for example compensation for a damaged asset

You don't have to pay CGT on:

your car
your main home - provided certain conditions are met
ISAs
UK Government gilts (bonds)
personal belongings individually worth £6,000 or less when you sell them
betting, lottery or pools winnings
money which forms part of your income for income tax purposes

Important Considerations:

if you are married or in a civil partnership and living together you can transfer assets to your husband, wife or civil partner without having to pay CGT
you may not give assets to your children or others or sell assets to them cheaply without having to consider CGT
if you make a loss you may be able to make a claim for that loss and deduct it from other gains, but only if the asset normally attracts CGT
if someone dies and leaves their belongings to their beneficiaries, there is no CGT to pay at that time - however if an asset is later disposed of by a beneficiary, any CGT they may have to pay will be based on the difference between the market value at the time of death and the value at the time of disposal

For further information about the 2023 Budget changes please click here.

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