CAPITAL GAINS TAX – Pre-Year End Thoughts

The decision to sell capital assets should first of all be driven by investment considerations rather than tax. However, provided it makes investment sense, you may wish to consider the following points before 5 April 2023, the tax year end:

The first £12,300 of gains made in 2022/23 are generally CGT-free. From 6 April 2023 this exemption reduces down to £6,000 and then to £3,000 from 6 April 2024.

Each spouse has their own annual exemption, as indeed do children. As the annual exemption cannot be carried forward, it will be lost if not used. Similar to the above, transferring assets free of tax to a lower earning spouse may create an opportunity to utilise their basic rate band so that CGT applies at 10% rather than up to 20%. (These rates are 18% and 28% for residential property).

A Bed & ISA transaction will allow you to utilise the current years ISA Allowance by moving investments from an unwrapped environment to the ISA Tax Wrapper. This is achieved by disposing of the unwrapped investment and repurchasing it via an ISA. The disposal of the unwrapped investments may be liable to CGT, but may be covered by your annual allowance, but once inside the ISA, the investments are sheltered from CGT in the future.

In certain circumstances you could also “straddle” a disposal of multiple assets across the tax year end to make use of two annual exemptions.

Alternatively, where you are planning on selling an asset, you may simply wish to consider delaying the disposal until after 5 April. This may be helpful from a cash flow perspective as any tax arising will not then be due until 31 January 2024, unless you are selling a residential property, the tax on which is due within 60 days of completion.

Sale by one spouse and repurchase by the other (Bed & Spouse). Normally a transfer from one spouse to the next is tax free but this technique is useful if you have another capital gain to offset the loss.



Striving to deliver exceptional financial services >>>

Scroll to Top