Capital Gains Tax: Exemptions
The question
To ask the Chancellor of the Exchequer, what recent assessment she has made of the adequacy of the annual exempt amount for Capital Gains Tax for individuals in supporting small investors and households; and whether she plans to review that threshold.
Answered by Dan Tomlinson
The Annual Exempt Amount (AEA) for Capital Gains Tax (CGT) is £3,000 for individuals and £1,500 for most trustees. In 2022, the previous Government reduced this from £12,300 (£6,150 for most trusts) to the current level, phased in over two tax years.
The purpose of the AEA is to ensure that people are not taxed on low levels of capital gains. The Government judges that the AEA remains at an appropriate level to fulfil this function, ensuring that only gains above a modest threshold are subject to CGT. This keeps many individuals out of the self-assessment system, with only about 1% of the population paying CGT each year, while supporting strong public finances.
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