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Mar 14, 2023

CGT allowance will halve in April

In a few weeks, the capital gains tax (CGT) allowance will drop to just £6,000 - more than half the current £12,300 exemption.

The Chartered Institute of Taxation (CIOT) is warning taxpayers that this change may require thousands more people to fill out a self-assessment form and possibly pay more tax.

Many may be unaware they need to pay CGT until it is too late, resulting in penalties for non-compliance.

Because of this risk, the CIOT is urging the Government to launch a publicity campaign highlighting the annual exemption reduction. The allowance is also set to halve again to £3,000 for the 2024/25 tax year, affecting taxpayers even further.

The change will likely impact people with small holdings of shares, non-UK residents selling property in the UK and those selling a second home - particularly those without tax advisers to warn them of the upcoming changes.

John Barnett, chair of CIOT's technical policy and oversight committee, said:

"A lower annual exemption means some people making smaller gains will now need to pay tax when they previously wouldn't have.

"We urge the Government to publicise these changes so that as many as possible of those who will be affected know their responsibilities and don't end up with a surprise tax bill in the future."

Talk to us about your capital gains tax bill.