What Is the Capital Gains Tax Allowance for 2023/24 UK?
Looking at capital gains tax allowance and how it can affect you
Capital Gains Tax is a tax that you are liable to pay when selling an asset that has increased in value since you originally purchased it, such as:
Shares that are not in an ISA or PEP
Any property that is not classed as your main residence
Your main residence if you have let it out or used it for business
Personal possessions (excluding your car) worth £6,000 or more (this will be changed to £3,000 from the 6th April 2024)
But how much can you expect in capital gains allowance 2023 24? And is this likely to change in the next tax year?
In this blog post we will be taking a deep dive into capital gains allowance, the effect the change will have on property, and how we can help you sell your property in as little as 7 days.
Looking for a quick answer? Check out our quick nav below!
What is capital gains tax allowance UK?
Capital Gains Tax allowance is the set amount that you can earn in profit that is CGT-free. The annual exempt amount changes each tax year, so you will only be required to pay capital gains tax on any yearly profits you make that go over this number.
The annual exempt amount has undergone radical change in the last few years, starting at £12,300 in the 2022/23 tax year before being cut by over half in the 2023/24 to £6,000 and is set to be halved again in the upcoming 2024/25 tax year, seeing the CGT allowance at £3,000. This means that over the last two years alone the capital gains allowance has been cut by around 75%.
Capital Gains Tax Allowance
In April 2023, the tax free allowance changed. As it currently stands, the Capital Gains Tax free allowance is:
£3,000 for trusts
What is the capital gains tax allowance for 2023 24?
As we have previously mentioned, the capital gains allowance 2023 24 is £6,00. This means that if you make any profit on assets over £6,000 then you will be required to pay capital gains tax on the excess amount in accordance to your tax rate.
What does this mean for Capital Gains Tax 2024?
In April 2024, the annual CGT tax allowance will change once again, this time being reduced by 50% to £3,000. This means that sellers will not be charged on the first £3,000 on a sale, but will be liable to pay tax on the rest of the profit.
What is capital gains tax allowance on property?
As it currently stands, the capital allowances on property for 2023/24 is £6,000. If you sell a property, then you will not be required to pay capital gains tax on the first £6,000 you earn from the sale.
An example of this would be selling a property for £250,000. You would then take away £6,000 for the capital gains tax allowance property, leaving you with £244,000 to pay CGT on.
In the event that your total taxable gains are under the CGT tax allowance, then you do not need to report them to HMRC or pay capital gains tax on them.
How much CGT do you need to pay on property?
Exactly how much CGT you will pay on a property depends upon the Income Tax band you are in. Below we take a closer look at the taxable gains you can expect on a property sale for both the current tax year (2023/24) and the upcoming tax year (2024/25).
|Taxable Gains on Property 2023 - 2024
|Capital Gains Tax Rate on Property 2023 - 2024
|Taxable Gains on Property 2024 - 2025
|Capital Gains Tax Rate on Property 2024 - 2025
|Up to £6,000
|Up to £3,000
|£6,001 - £50,270
|£3,001 - £50,270
|£50,271 and above
|£50,271 and above
What is the capital gains tax exemption?
The capital gains allowance 2023 24 is currently set at £6,000, however, this is set to change in the 2024/25 tax year. In the November 2022 budget, it was announced that CGT would be reduced to £3,000 from 6th April 2024.
This is classed as a 'use it or lose it' exemption. This means that it cannot be carried forward into years to come. This means that the best route for you to take may be to crystalise gains from each year to the full extent of the annual allowance if you are able to do so.
It is also worth bearing in mind that any transfers between spouse or civil partner are classed as 'no gain, no loss'. This means that gains and losses do not arise on transfers and that the recipient will effectively assume the donor spouse base cost.
What happens if I make a loss on my sale?
If your sale results in a loss, then you may avoid paying some CGT. These are referred to as 'allowable losses' and you are able to deduct them from your profit when it comes to working out your taxable gains. If you wish to reduce the CGT you will pay on the sale of your property, then you will need to report the losses to HMRC in your Self-Assessment tax return form.
If the gains from the current tax year are less than the capital allowances then you do not need to report them. You will be able to carry these forward to the next tax year.
What are Capital Gains Tax rates?
How much CGT you will pay will depend on the bracket of taxpayer you are.
If you are paying a higher rate income tax or you are an additional rate taxpayer, then you will be liable to pay:
28% on your gains from residential property
20% on any gains from other chargeable assets
If you are a basic rate taxpayer, then the rate that you'll be liable to pay will depend upon the size of your gain, your taxable income, and whether your gain is a result of residential property or other assets.
If you are unsure of how much taxable income you have, then you will need to work this out. In order to do so, you will have to minus your income from your personal allowance and any income tax reliefs you may be entitled to.
From here, you can work out your total taxable gains and then take away your tax-free allowance from it. You should then add this amount to your taxable income.
If this amount is within the basic income tax band then you will need to pay 10% on your gains (or 18% on residential property. You will then pay 20% (or 28% on residential property) on any amount you have that is above the basic tax rate.
If you are a trustee, then you will be required to pay:
28% on residential property
20% on chargeable assets
And if you are a sole trader or partnership, then you will pay 10% if your gains qualify for Business Asset Disposal Relief.
How can The Property Buying Company help me?
If you are looking to sell your property fast in order to downsize your portfolio or to dispose of a second home, then it is in your best interests to secure a fast sale. Whilst the open market may be top of your list for places to search in the hopes of selling quickly, it may not be fast enough. The majority of property sales that take place on the open market can take upwards of 100 days to complete, which is hardly ideal when speed is a matter of urgency.
If you are looking for a fast selling avenue that can have cash in your bank in as little as 7 days, then you have come to the right place. Here at The Property Buying Company, we will buy any house, in any location, and in any condition. We specialise in purchasing property, and we believe that it shouldn't be complicated.
As a genuine cash buyer, we have the funds readily available to purchase your property as soon as you are ready to sell. We do not need to secure a mortgage or loan before we purchase, meaning we tailor our service to suit you. Whether you wish to sell in as little as 7 days or as far in advance as 4 months time, we are here to help.
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If you're looking to sell your house fast and for free, then get in touch today and fill out one of our free, no-obligation forms to receive your CASH offer, which we could have in your bank in as little as 7 days.