Beware the lower tax exemption for Capital Gains

Capital Gains Tax is a tax on the profit made when you sell certain assets that have increased in value. CGT may be due when you dispose of a range of assets.These can include:

• Shares that aren’t held in a tax-efficiently
• Property that isn’t your main home
• Personal possessions sold for £6,000 or more, (this excludes your car).

It is estimated that in the last 10 years less than 3% of UK adults paid CGT. However, the CGT total paid between 2010 and 2020 tripled to £65 billion.The number of people paying the tax could soar over the coming years due to the significant reduction in the amount of profit which can be made before CGT is due.The amount of profit you can make during the year before CGT is due has fallen significantly over the last couple of years. The amount of tax-free capital gains in a tax year has fallen to just £3,000 from 6 April 2024.For those sitting on share or unit trust portfolios, great care should be taken when considering realising proceeds from these. Some shares will have done exceptionally well and show significant gains over a period (conversely some have gone the other way!) Calculating the gain can be complex, especially where dividends are reinvested or distributions accumulated, or where there are multiple acquisitions and/or disposals over a period of time.If you are thinking of selling any holdings, please talk to us first before taking any action. This could prevent some potentially large tax bills.