Capital Gains Tax: annual exempt amount for tax year 2018 to 2019
Published 27 February 2018
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Who is likely to be affected
Individuals, trustees of settlements and the personal representatives of deceased persons who have capital gains.
General description of the measure
This measure increases the Capital Gains Tax (CGT) annual exempt amount to £11,700 for individuals and personal representatives and £5,850 for trustees of settlements for the period 2018 to 2019.
Policy objective
The annual exempt amount is increased annually to keep pace with inflation in-line with rises in the Consumer Prices Index (CPI).
Background to the measure
This measure was announced at Autumn Budget 2017.
Detailed proposal
Operative date
This measure will have effect in relation to gains accruing on or after 6 April 2018.
Current law
The rules for the annual exempt amount are at section 3 of the Taxation of Chargeable Gains Act 1992 (TCGA). Section 3(2) provides that the annual exempt amount for individuals and personal representatives for a tax year is £11,300.
Sections 3(3) to 3(5) provide that, unless Parliament otherwise determines, the annual exempt amount limit is increased annually in-line with increases in the CPI during the year to September, rounded to the up to the nearest multiple of £100.
Section 3(8) provides that TCGA, Schedule 1 applies to trustees of a settlement. Schedule 1, paragraph 2(2) provides that trustees receive one half of the annual exempt amount, effectively £5,650.
Proposed revisions
The rate of CPI to September 2017 was 3%. Consequently a Treasury Order will be made amending section 3(2) increasing the annual exempt amount for the year 2018 to 2019 by £400, which includes the necessary rounding up, to £11,700 for individuals and personal representatives.
This will also have the effect of increasing the annual exempt amount for trustees of settlements to £5,850.
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 |
|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is expected to have minimal impact on individuals as it simply increases the existing annual exempt amount in-line with CPI.
This measure is not expected to have an impact on family formation, stability or breakdown.
Equalities impacts
The increase is expected to impact people sharing protected characteristics with others of above average means.
Impact on business including civil society organisations
This measure is expected to have no impact on businesses or civil society organisations as it only affects individuals and trustees who pay CGT in their personal capacity, and personal representatives who pay CGT in their professional capacity on behalf of an individual.
Operational impact (£m) (HM Revenue and Customs (HMRC) or other))
HMRC processing systems are designed to accommodate tax changes. The change will not increase HMRC processing or compliance resource.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from tax receipts.
Further advice
If you have any questions about this change, please contact Nick Williams on Telephone: 03000 585660 or email: Nick Williams.