Utilising the capital gains tax annual exemption

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Utilising the capital gains tax annual exemption
  • Why is this important?
  • Choosing how to use the annual exemption
  • Consider the family
  • Action before the tax year end

Why is this important?
Tax-free amount

Each individual (with some exceptions ― see below) is entitled to an annualexempt amount when calculating the taxable amount of his chargeable gains for the tax year. The annualexempt amount is also known as the annualexemption. The annualexemption is similar to the personal allowance for income tax in that the amount of gains covered by the annualexemption is not chargeable to capital gains tax (CGT).

TCGA 1992, s 1K(1) (from 6 April 2019); TCGA 1992, s 3(1) (up to 5 April 2019)

The annualexemption is £11,700 for the 2018/19 tax year and £12,000 for the 2019/20 tax year.

TCGA 1992, s 1K(2) (2019/20); TCGA 1992, s 3(2) (2018/19)
No carry-forward

Any part of the annualexemption that is not set against gains in the tax year is lost. It cannot be carried forward or transferred to another person.

Restricted annualexemption

Personal representatives of a deceased person’s estate are entitled to the full annualexemption for an individual for the year the deceased died and the following two tax years. If gains arise beyond that period, no annualexemption is available.

TCGA 1992, s 1K(7) (from 6 April 2019); TCGA 1992, s 3(7) (up to 5 April 2019)

Trustees are generally entitled to an annualexemption equal to half that available to an individual. Where there is a group of settlements made by the same settlor, the annualexemption for each settlement is proportionally reduced (the minimum annualexempt amount is £1,170 for 2018/19 and £1,200 for 2019/20).

TCGA 1992, s 1K(8), Sch 1C, para 5 (from 6 April 2019); TCGA 1992, s 3(8), Sch 1, para 2 (up to 5 April 2019)
Nil annualexemption

If a non-domiciled (or also, from 6 April 2017, not deemed domiciled) taxpayer makes a claim to

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