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Capital Gains Tax Annual Exemption 2023/24 | How To Work Out Your Capital Gains Tax

Capital Gains Tax Annual Exemption 2023/24 | How To Work Out Your Capital Gains Tax

Mike Wakeford

What Are The Changes To Capital Gains Tax For 2023/24
The annual exempt amount on capital gains tax for individuals in2023-24 was reduced to £6,000 (from £12,300) and is set to be further halved to £3,000 from April 2024. A married couple each have a separate exemption. This also applies to civil partners who are treated in the same way as married couples for capital gains tax purposes.

How to Figure Out Your Capital Gains:
To work out capital gains tax for a tax year, you should take the following steps:

  1. Work out the gain for each asset (or your share of an asset if it’s jointly owned). Do this for the personal possessions, shares or investments, UK property or business assets you have disposed of in the tax year.
  2. Add together the gains from each asset.
  3. Deduct any allowable losses.
  4. Report and Pay your Capital Gains Tax

If the total gains are less than the relevant annual exempt amount, then no capital gains tax is due. Taxpayers still need to report gains in their tax return if both of the following apply:

1.    The total amount they sold the assets for was more than 4 times their allowance; and 
2.    They are registered for Self-Assessment.

Please note disposals of some types of asset are not subject to the capital gains rules
Utilising Capital Gains When Married
Married couples and civil partners should ensure that assets sold at a gain are either jointly owned or that each partner utilises their annual exempt amount wherever possible. Any unused part of the annual exempt amount cannot be carried forward and is forfeited if unused in the current tax year.

Using a Partners Allowance
In the position where your partner has unused capital gains exemption, while the exemption cannot be transferred over  to a partner, the relevant asset can be and inherits the ownership history of the spouse or civil partner. In this way the allowance can be utilised. 

Capital Gains Rates
Capital gains tax is usually charged at a simple flat rate of 20%. If you only pay basic rate tax and make a small capital gain, they may be subject to a reduced rate of capital gains tax of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% capital gains tax. A higher rate of CGT (8% supplement) applies to gains on the disposal of chargeable residential property. In addition to the different rates payable there is a requirement to report and pay on account any tax on gains within 60 days of completion of a sale of property.

Capital Gains Tax When Selling An Asset
If you have sold or are planning to sell any assets in the current tax year it is important to ensure that you take full advantage of the annual CGT exemption and arrange your affairs to ensure the optimum CGT position. For example, capital losses are deducted from gains before net gains are calculated. Crystallising a loss that will waste the annual exemption should therefore be avoided.
Speak To A Specialist.
If you need help when it comes to utilising your capital gains annual allowance for this tax year before the reduction to £3,000, please speak to one of  Personal Tax Specialists today. We can help prepare reports for Capital gains and to figure out the most effective way to deal with your gain.