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Capital Gains Tax Changes: AEA From April 2023

16th March, 2023

In the Chancellor’s Autumn Statement, he announced changes to Capital Gains Tax Allowances i.e the Annual Exempt Amount (AEA).

These changes will be implemented from 6th April 2023 – but what do they mean? That’s what we’ll be exploring today.

Continue reading to learn more about the impending changes to the Capital Gains Tax (CGT), and how you’ll be affected by it.


What is Capital Gains Allowance?

Before we explore the upcoming changes to Capital Gains Tax, let’s outline what exactly Capital Gains Tax and AEA is.

You are required to pay CGT when you sell or dispose of items. The disposal of assets could include selling property and land (including residential property, second homes and investment properties).

CGT can also be payable on art sales, shares that are held outside of an ISA or PEP, and antiques.

It is calculated on the difference between the amount the item was purchased for and the value when sold or disposed of. This can include when an item has been gifted. Allowable expenses may be deducted when calculating the amount of tax due – for example, with property, you may deduct legal fees.

Currently, the AEA is £12,300 for individuals and £6,150 for Trustees. The CGT rate payable on disposal that exceeds your AEA depends on your Income Tax band.


How You’ll Be Affected By Capital Gains Tax Changes

The Chancellor announced in his Autumn Statement 2022 that Individuals with gains in excess of the current AEA will pay more CGT. This will be in effect from the 6th of April 2023.

The AEA is decreasing from £12,300 to £6,000 in the 2023-2024 tax year. From the following tax year (2024-2025), it will drop to £3,000. The maximum additional liability an individual will pay depends on the applicable rate.

The impact of this could mean an additional tax of up to £1,764 in 2023-2024; and £2,604 from 2024-2025 onwards.

Trusts will be liable for half of this amount. Capital gains on assets held within an ISA for example will not be affected. There is no change to any gains made from the sale of principal private residences (PPRs).

The Government estimates that during the tax year 2023 – 2024, around 500,000 people and trusts could be impacted by these changes. The following tax year could see 570,000 people affected. For more information, please refer to the Government website.


Haggards Crowther Can Help You

If the proposed changes to the AEA (Annual Exempt Amount) will affect you as an individual or as a Trustee of a Settlement/Trust, please feel free to speak with your Client Manager at Haggards Crowther and they will be happy to discuss the matter with you in greater detail.

We provide a range of tax and accounting services and can help you if you require assistance calculating potential capital gains. Likewise, we can provide you with efficient tax advice. Contact us today to learn more about our services and how we can help you.

We have a dedicated team of tax professionals who are committed to providing you with the best advice for your particular situation. We understand the complexities of the CGT system and are well-versed in the latest regulations, so you can be assured that we will provide you with the most accurate and up-to-date advice.

Our experts can also help you with filing relevant CGT returns, if applicable, and ensure that you are claiming the appropriate allowances. With our extensive knowledge and expertise, we are confident that we can help you to maximize your savings and minimize your tax liabilities.