Budget Summary 2023/24

Capital Gains Tax

Rates and annual exempt amount

The Autumn Statement included the announcement that the annual exempt amount would be cut from £12,300 to £6,000 for 2023/24 and to £3,000 for 2024/25. The rates of CGT are unchanged at 10% for basic rate taxpayers and 20% for higher rate taxpayers on general assets, and 18%/28% on residential property and carried interest.

The reduction in the exempt amount will increase the tax payable, and it is also likely to require more people to complete self-assessment returns in order to report chargeable gains. Anyone with gains of more than the exempt amount has to report them. If gains are lower than the exempt amount, up to 2022/23 it has only been necessary to file CGT pages of the self-assessment return if the proceeds of sale are four times the annual exempt amount (£49,200); from 2023/24, the reporting limit is set at £50,000.

CGT for separating spouses

Currently, tax neutral (‘no gain, no loss’) transfers between spouses (where the recipient takes over the CGT cost of the transferor) are only available where they have been married and ‘living together’ in the tax year. This means that they cease to be regarded as married from the end of the tax year in which they permanently separate, giving relatively little time (particularly if they separate late in a tax year) to organise asset transfers without triggering CGT charges.

Transfers after the end of the tax year of separation are treated as made at market value, which may crystallise a chargeable capital gain for the transferring spouse.

The window for making tax neutral transfers is extended to the earlier of:

This will be effective for transfers from 6 April 2023, irrespective of the date of separation. Also, transfers as part of a formal divorce settlement under a court order will take place at no gain, no loss without time limit.

Other changes are: