Capital Gains Tax
Annual Exempt Amount (AEA)
2018/19 2017/18 Individuals and deceased estates £11,700 £11,300 Most trusts 5,850 5,650
- Each individual is entitled to an AEA, but that exemption may be denied if they claim the remittance basis (see Personal Taxation).
- The AEA cannot be transferred, nor carried forward or back to another tax year.
2018/19 & 2017/18 Residential property Other Individual – to limit of basic rate band 18% 10% Individual – above basic rate band 28% 20% Trusts and deceased estates 28% 20%
- CGT is payable on capital gains made in the tax year, after deduction of capital losses, available reliefs and the annual exemption.
- Receipts of carried interest by venture capital investors are taxed at the same rates as residential property.
- When a chargeable asset is given away, the donor is treated as receiving the full market value and is liable for CGT accordingly.
- There is no charge on disposals between spouses or registered civil partners who are living together. On such disposals, the transferee takes over the transferor’s CGT cost.
- There is no CGT on gains accrued to the date of a taxpayer’s death.
Entrepreneurs’ Relief (ER)
2018/19 2017/18 Lifetime limit £10m £10m CGT on qualifying disposals 10% 10%
- Disposals made by an individual or certain trustees can qualify for ER.
- The asset disposed of must have been owned for at least a year and be one of:
- a business or an interest in a business
- business assets sold within three years of the business ceasing
- shares in a trading company, of which the individual is an officer or employee and either holds at least 5% of the ordinary share capital or acquired the shares under an EMI scheme
- assets used by the shareholder’s personal company or partnership and sold at around the same time as 5% or more of either the company’s shares or the partnership interest.
2018/19 2017/18 Lifetime limit £10m £10m
- This relief gives a 10% CGT rate to certain investors in qualifying unquoted trading companies.
- Investors cannot be paid directors or employees of the company and must hold newly issued shares (acquired on/after 17 March 2016) for a minimum period of 3 years beginning on/after 6 April 2016. Thus the earliest date on which a qualifying disposal can be made is 6 April 2019.
Other CGT reliefs
Asset Conditions Taxpayer’s only or main home Gain is exempt for the periods the taxpayer lives there, or is deemed to live there, plus the last 18 months of ownership. Chattels (tangible movable property) If bought and sold for less than £6,000. Gifts to charity Not charged to CGT, and gifts of quoted shares and land also enjoy an income tax relief. Assets which become of negligible value Deemed to be sold at nil, to create loss, when an election is made.