CGT Allowance 2023/24 – Clear Guide for Smart Tax Planning

The Capital Gains Tax (CGT) allowance for the 2023/24 UK tax year marks one of the most significant tax policy shifts in recent years. For individual taxpayers, personal representatives, and most trustees, new reduced exemption levels have notable implications for anyone making chargeable asset disposals. This annual threshold, often called the Annual Exempt Amount (AEA), determines how much capital gain can be realized tax-free within the fiscal year, impacting both tax planning and investment strategies.

Throughout the 2023/24 period, updated CGT rates and allowance reductions have triggered considerable interest among investors and property owners. The changes reflect a wider government move to increase the number of taxpayers subject to CGT, emphasizing the importance of understanding eligibility, calculation, and reporting obligations under these new rules.

What is the CGT Allowance 2023/24?

• The CGT annual exempt amount reduced to £6,000 for individuals in 2023/24, affecting more taxpayers than previous years.
• Spouses and civil partners each have their own allowance, potentially doubling the exemption with careful planning.
• Tax-free gains must be claimed within the tax year or are lost; unused allowances cannot be carried forward.
• Gains over the threshold are taxed at rates depending on income band and asset type (ranging from 10% to 28% for 2023/24).
• Principal private residence disposals remain exempt from CGT.
• Reporting via Self Assessment is required when gains exceed the allowance or for certain asset disposals.
• Further reductions for 2024/25 (to £3,000) mean potential gains should be realized before 6 April 2024.

Who Qualifies for the CGT Allowance 2023/24?

Eligibility Criteria and Key Groups

Eligibility for the 2023/24 CGT allowance extends to private individuals, personal representatives administering estates, and most trustees of settlements. Each party calculates their gains individually, applying the exemption only to qualifying chargeable disposals such as shares, securities, investment portfolios, second homes, cryptocurrencies, and other non‐exempt assets.

Joint and Spousal Exemptions

Spouses and civil partners are treated individually for CGT but can freely transfer assets without triggering a tax event. By holding qualifying assets jointly, couples may collectively exempt up to £12,000 of gains in the 2023/24 tax year, provided both allowances are used before 6 April 2024.

Excluded Asset Classes and Exceptions

Capital gains realized from the sale of one’s main home—when qualifying as the principal private residence—are exempt, provided the relevant conditions are met. Certain trust types may have different allowances or rules under UK tax law. For 2023/24, the vast majority of other UK and offshore disposals are in scope, driving added recordkeeping and compliance duties for a broader range of taxpayers.

How to Calculate CGT and Its Impact in 2023/24

Step-by-Step Calculation

To determine Capital Gains Tax owed under the 2023/24 allowance, aggregate all chargeable gains over the fiscal year for each taxpayer. Subtract the AEA (£6,000 for individuals; £3,000 for most trustees) from this total, after deducting allowable losses and any tax reliefs. The remaining sum is then taxed at the applicable CGT rate based on the individual’s income tax band and the nature of the asset disposed.

CGT Rates and Practical Examples

For the 2023/24 tax year, gains from non‐residential assets (such as shares) are taxed at 10% for basic‐rate taxpayers and 20% for higher/additional‐rate taxpayers. Residential property gains attract higher rates: 18% for basic‐rate, 28% for higher‐rate taxpayers. For example, a higher‐rate taxpayer realizing a £120,000 gain on property would subtract the £6,000 AEA to calculate CGT on £114,000, resulting in tax payable of approximately £27,360.

Impact on Overall Tax Liability

The sharp reduction in the exemption from previous levels means that many gains previously untouched by CGT are now taxable, increasing the number of people needing to report capital gains. Strategic planning, such as crystallizing gains ahead of 6 April 2024, enables taxpayers to utilize the higher allowance for 2023/24 before further reductions apply.

Recent Updates and Changes in the CGT Allowance

Comparing 2023/24 with Previous Years

The CGT allowance for 2023/24 was halved to £6,000 for individuals—down from £12,300 in 2022/23—reflecting a decisive move to expand the population of chargeable gains. Most trustees saw their exemption fall to £3,000 from £6,150. These reductions are part of a planned sequence of cuts, with further reductions to £3,000 (individuals) and £1,500 (trustees) for the 2024/25 tax year and beyond.

HMRC Policy and Rate Changes

Capital Gains Tax rates remained unchanged during most of the 2023/24 year but are scheduled for increase from late 2024 onwards, realigning top rates for both residential and non‐residential gains to 24%. The government has also tightened reliefs such as Investors’ Relief, with a new £1 million lifetime limit, and announced further changes for 2025/26, affecting planning for business owners and other investors.

Guidance for Investors and Trustees

HMRC encourages all affected parties—especially trustees and higher‐rate taxpayers—to check assets and structure disposals carefully to optimize use of both the annual allowance and spousal exemptions. For complex cases or significant assets, independent professional advice and checking the official guidelines are strongly recommended.

When Did Key Changes to the CGT Allowance Occur?

1. March 2022: Announcement of the reduction in the CGT allowance to take effect for 2023/24. (source)
2. 6 April 2023: The halved allowance of £6,000 for individuals and £3,000 for most trustees becomes effective. (source)
3. October 2023: Confirmation of planned reduction to £3,000 for individuals and £1,500 for trustees from 6 April 2024. (source)
4. 6 April 2024: Implementation of the next reduction to £3,000 (individuals) and £1,500 (trustees). (source)
5. 6 April 2025: Further CGT policy changes expected to affect relief rates and higher bands. source

What Do We Know for Certain and What Remains Unclear?

What Is the Broader Context for the CGT Allowance 2023/24?

The UK’s move to reduce the annual exempt amount marks a policy shift intended to widen the CGT net. In prior years, gains of up to £12,300 escaped tax, placing relatively few taxpayers within scope. Lowering the threshold to £6,000 and then £3,000 is projected to increase HMRC receipts and promote more even tax treatment between income and capital.

Professional advisors note that the falling allowance presents both challenges and opportunities, including a greater need for accurate recordkeeping, active tax planning, and exploiting reliefs such as Business Asset Disposal Relief (BADR). Investors are encouraged to reconsider the timing of asset disposals in light of these evolving rules.

Where Are the Expert Sources and Key Quotes on CGT Allowance 2023/24?

“The CGT annual exempt amount for 2023/24 is £6,000 for individuals, with further reductions to £3,000 set for 2024/25 and beyond.” – HMRC official guidance

“Smaller gains that previously would have escaped tax are now potentially chargeable to CGT, highlighting the need for well-timed disposals and joint planning between spouses.” – CGT Exempt Allowance Halving From April 2024

“Professional advice is particularly important for complex trusts or significant disposals, given the recent sequence of legislative and rate changes.” – Capital Gains Tax (CGT) Allowance for 2023/24

How Should Investors and Taxpayers Respond to These Changes?

With the CGT allowance halving in 2023/24 and due to fall further, taxpayers face a greatly increased need for timely planning, documentation, and potential adjustment of investment strategies. Early realization of eligible gains or restructuring asset holdings ahead of 6 April 2024 may offer meaningful advantages. For ongoing updates and resources, consult CGT Exempt Allowance Halving From April 2024.

Frequently Asked Questions