Realise Profits and Capital Gains Before April 2023
Published / Last Updated on 06/01/2023
There is currently a £12,300 per year, 0% rate tax band for capital gains. The government will reduce the nil rate Capital Gains Tax yearly allowance from £12,300 to £6,000 from April 2023.
If you have personal possessions worth £6,000 or more, apart from your car, business assets, cryptocurrency assets, investment property or shares (not inside an ISA), when you sell them or gift them away, you may be subject to capital gains tax if the yearly gain exceeds your CGT allowance (£12,300 pa but going down to £6,000 pa in April 2023 and even lower to £3,000 pa in April 2024.
Tax rates for gains above your CGT allowance are:
- For higher rate taxpayers: 28% on your gains from residential property and 20% on your gains from other chargeable assets.
- For basic rate taxpayers: 18% on your gains from residential property and 10% on your gains from other chargeable assets.
- Note: for qualifying Business Asset Disposal Relief that rate is 10% up to £1m of trading business assets sold/disposed of.
This means that if you plan to dispose of assets, you should consider this before your capital gains tax allowance is reduced from £12,300 pa to £6,000 pa and then to £3,000 pa. This means an extra £6,300 in gains is taxable from April 2023 and from April 2024 an extra £9,300 of gains will be taxable when compared to today
By disposing of assets in this tax year before the allowance falls to £6,000 in April 2023 you could save taxes of:
- For higher rate taxpayers: £1,764 CGT from residential property disposals and £1,260 in CGT from other chargeable asset disposals.
- For basic rate taxpayers: £1,134 CGT from residential property disposals and £630 in CGT from other chargeable asset disposals.
By disposing of assets in this tax year before the allowance falls to £3,000 in April 2024 you could save taxes of:
- For higher rate taxpayers: £2,604 CGT from residential property disposals and £1,860 in CGT from other chargeable asset disposals.
- For basic rate taxpayers: £1,674 CGT from residential property disposals and £930 in CGT from other chargeable asset disposals.
