Sarah Bradford examines the impact of the Chancellor of the Exchequer’s decision to reduce the capital gains tax annual exempt amount. 

In Autumn Statement 2022, the Chancellor of the Exchequer opted, in the main, to raise tax revenues by freezing or reducing allowances and thresholds rather than raising headline rates of tax.  

One victim of this approach is the annual exempt amount for capital gains tax (CGT) purposes, which is to be cut progressively so that by 2023/24, it will be less than a quarter of its current level. The progressive reduction of the allowance means that clients may need to time disposals carefully. 

The legislation governing the annual exempt amount is found in TCGA 1992, ss 1K and 1L. 

Nature of the annual exempt allowance 

The annual exempt amount is the CGT equivalent of the personal allowance available for income