Published On: 6 February 2023

From 6 April 2023, the Capital Gains Tax (CGT) annual exempt amount reduces from £12,300 to £6,000. And it falls again to £3,000 from 6 April 2024. 

Capital Gains Tax is paid on the gain you make when you sell (or ‘dispose of’) shares that are not in an ISA, property other than your own home, business assets and most possessions worth over £6,000. 

So, for example, if you own shares that you plan to cash in, and you’ve made £10,000 since you first invested, from 6 April 2023, you’ll pay CGT if the difference between the initial purchase price and the total gain made on disposal is above the reduced annual exempt amount of £6,000. Whereas if you cash in before 6 April 2023, the gain falls within the annual exempt amount and won’t be taxed. 

The tax rate you pay depends on your taxable earnings. In the current tax year (2022/23) most people can earn up to £50,270 before paying the higher rate of CGT which is 20%. If your taxable earnings are less than this, you pay the basic rate of 10%. These rates increase when selling property to 18% for the basic rate and 28% for the higher rate. 

If you plan to sell any of your investments and think you may be affected by the changes to the annual exemption allowance, please get it touch with your adviser.

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