Thank you for contacting me about Capital Gains Tax (CGT).
The Chancellor has been clear that to tackle the economic challenge facing the UK, we need to take tough but fair decisions to restore economic stability and repair the public finances. However, headline rates of CGT, as with other taxes, will not rise. Instead, the exempt amount of CGT is being reduced.
The Autumn Statement reduced the generosity of the Dividend Allowance and the CGT Annual Exempt Amount. The Personal Allowance will generally be available in addition to the reduced Dividend Allowance and CGT Annual Exempt Amount.
The CGT Annual Exempt Amount will be reduced from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
Through the Budget 2023, the Government will legislate to crack down on CGT avoidance. It will do this by legislating to close an avoidance loophole that can leave HMRC out of time to assess tax due on capital gains when an asset is disposed of under an unconditional contract. The changes will apply in relation to contracts entered into on or after 1 April 2023 for corporation tax and 6 April 2023 for Capital Gains Tax
Taken together, once they come into effect, these policies will raise an additional £475 million in 2024/25, and £620 million in 2025/26.
As set out in the Government’s response to the Office of Tax Simplification's report on CGT on 30 November 2021, substantial reforms to CGT rates and allowances would involve a number of wider policy trade-offs and so careful thought must be given to the impact that they would have on taxpayers, as well as any additional administrative burden on HMRC. I know that the Government will continue to keep the tax system under review to ensure it is simple and efficient.
Thank you again for taking the time to contact me.