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Autumn Statement 2022: Capital Gains Tax exemption cut to hit investors

Nick Cheek
Written By:
Nick Cheek

The annual exemption for Capital Gains Tax (CGT) will be more than halved from £12,300 to £6,000 from April next year.

In the Autumn Statement, Chancellor Jeremy Hunt said that the CGT exemption threshold would then fall to £3,000 from April 2024.

The move was predicted by experts in YourMoney.com last week.

He also announced a further future cut, halving it again from April 2023/24 to £3,000.

CGT is levied on profits from assets such as  investments and properties that are not the primary residence, when they are sold or given away.

A hit on investors

A number of experts fear that the cut to the exemption will hit investors, large and small, and increases the importance of tax-free wrappers such as ISAs.

Jason Hollands, managing director of Bestinvest, the online investment platform said: “In another blow to entrepreneurs, investors, and owners of second properties, the annual exemption for CGT will be slashed from £12,300 to £6,000 next year and then to a paltry £3,000 from April 2024.

“This will mean great care needs to be taken when managing an investment portfolio outside of tax-free wrappers to avoid incurring tax liabilities when shifting holdings around.”

Use your ISAs and allowances wisely

Chris Springett, tax partner at wealth management and professional services firm Evelyn Partners, also noted the importance of using these tax-free wrappers and reducing exposure to CGT via allowances.

He said: “What this does for all taxpayers, is make the case for holding investments in wrappers that afford tax protection even more compelling than it is already. Investments held in ISAs and pensions are exempt from CGT – which is why many investors never encounter the tax.

“And it is a reminder of the sense in using allowances effectively. In terms of reducing CGT exposure, married couples and those in civil partnerships can transfer assets to each other – known as an interspousal transfer – to make use of both sets of allowances, as well as shift a potential gain to whichever partner might be exposed to a lower tax band.”