Changes to the annual exempt amount for Capital Gains Tax for the tax year 2020 to 2021
Published 11 March 2020
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This publication is available at https://www.gov.uk/government/publications/changes-to-the-annual-exempt-amount-for-capital-gains-tax-for-the-tax-year-2020-to-2021/changes-to-the-annual-exempt-amount-for-capital-gains-tax-for-the-tax-year-2020-to-2021
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 £12,300 for individuals and personal representatives and £6,150 for trustees of settlements for the period 2020 to 2021.
Policy objective
The annual exempt amount is increased annually to keep pace with inflation in line with rises in the Consumer Prices Index.
Background to the measure
This measure was announced at Budget 2020.
Detailed proposal
Operative date
This measure will have effect in relation to gains accruing on or after 6 April 2020.
Current law
The rules for the annual exempt amount are Part 1, section 1K and 1L of the Taxation of Chargeable Gains Act 1992. Section 1L provides that the annual exempt amount which is presently set at £12,000, is increased annually in line with increases in the Consumer Prices Index, 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 £6,000.
Proposed revisions
The rate of Consumer Prices Index to September 2019 was 1.7%. Consequently, a Treasury Order will be made increasing the annual exempt amount for the year 2020 to 2021 to £12,300 for individuals and personal representatives.
This will also have the effect of increasing the annual exempt amount for trustees of settlements to £6,150.
Summary of impacts
Exchequer impact
| 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 |
|---|---|---|---|---|---|
| - | 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 a positive impact on individuals and trustees who pay Capital Gains Tax in their personal capacity by increasing the existing annual exempt amount in line with Consumer Prices Index. This measure is not expected to have an impact on family formation, stability or breakdown. Customer experience is expected to stay broadly the same because this measure simply increases the annual exempt amount. It does not make any other changes.
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. It only affects individuals and trustees who pay Capital Gains Tax in their personal capacity and personal representatives who pay Capital Gains Tax in that capacity on behalf of an individual or estate.
Operational impact (£m) (HMRC or other)
A cost in the region of £100,000 will be incurred in delivering the relevant IT changes.
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, contact Nick Williams on Telephone: 03000 585660 or email: nicholas.williams@hmrc.gov.uk.