Policy paper

Capital Gains Tax: annual exempt amount for tax year 2019-20

Published 29 October 2018

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 annual exempt amount to £12,000 for individuals and personal representatives and £6,000 for trustees of settlements for the period 2019 to 2020.

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 2018.

Detailed proposal

Operative date

This measure will have effect in relation to gains accruing on or after 6 April 2019.

Current law

The rules for the annual exempt amount are part 1, section 3 of the Taxation of Chargeable Gains Act (TCGA) 1992. Section 3 provides that the annual exempt amount which is presently set at £11,700, is increased annually in line with increases in CPI, rounded up to the nearest multiple of £100. It also provides that the annual exempt amount available to most trustees of settlements is one half that due to individuals, effectively £5,850.

Proposed revisions

Legislation will be introduced in Finance Bill 2018 increasing the annual exempt amount to £12,000. This will also have the effect of increasing the annual exempt amount for trustees of settlements to £6,000.

Summary of impacts

Exchequer impact (£m)

2018 to 2019 2019 to 2020 2020 to 2021 2021 to 2022 2022 to 2023 2023 to 2024
nil 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 economic 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

It is not anticipated that this measure will impact on groups sharing protected characteristics.

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 Capital Gains Tax in their personal capacity, and personal representatives who pay Capital Gains Tax in their professional capacity on behalf of an individual.

Operational impact (£m) (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 585 660 or email: nicholas.williams@hmrc.gsi.gov.uk.