From April 2023, the exemption for Capital Gains Tax is set to be reduced.
Now is the time to make sure you get ready, to advise your clients on the drop in the threshold.
What is Capital Gains Tax?
Capital Gains Tax (CGT) is a tax that is payable on any profits made from the sale of an asset that has increased in value. In the United Kingdom, CGT applies to a wide range of assets, including stocks, property, and personal possessions.
What are the changes to the Capital Gains Tax Annual Exemption?
The current annual exempt amount will drop from £12,300 to £6,000 from April 2023. It will then be reduced to only £3,000 from April 2024.
How can I get ready for the drop in the Capital Gains Tax Exemption?
The current UK Capital Gains Tax rate is 20 per cent for higher rate taxpayers and 10 per cent for basic rate taxpayers. However, there are various exemptions and reliefs available that can reduce the amount of CGT payable. If you make a gain after selling a property, you’ll pay 18 per cent capital gains tax (CGT) as a basic-rate taxpayer, or 28 per cent if you pay a higher rate of tax. Gains from selling other assets are charged at 10 per cent for basic-rate taxpayers, and 20 per cent for higher-rate taxpayers.
At MGI Midgley Snelling LLP we are able to explain CGT to your clients in terms they will understand and help them with their tax affairs. To find out more, please contact us.