Autumn Budget 2021 – Capital Gains Tax

The rumoured changes to capital gains tax (CGT) again failed to materialise.

The only change to capital gains tax in the Autumn Budget was a welcome measure hidden in the accompanying documents to extent the time limit for making CGT returns and payments for residential properties for disposals that complete on or after 27 October 2021 from 30 days to 60 days.

For the tax years 2021-22 to 2015-26, the capital gains tax (CGT) annual exempt amount will remain frozen at £12,300 for individuals, personal representatives of deceased persons and trustees of certain settlements for the disabled. The annual exempt amount for most other trustees will be £6,150.

For capital gains above the annual exempt amount the CGT rate for basic and higher rate tax payers will remain at 10 and 20 per cent respectively.

Gains on residential properties (not qualifying as your personal private residence) and carried interest (the share of profits or gains that is paid to asset managers) will remain at the 18 and 28 per cent for basic and higher rate tax payers respectively.

Residential properties

A reminder that, for disposals of residential property by UK residents made on or after 6 April 2020, a return in respect of the disposal must be made to HMRC within 60 (increased from 30 in the Autumn Budget) days of the disposal, and a payment on account made at the same time. The self-assessed calculation of the amount payable on account takes into consideration unused losses and the person’s annual exempt amount. The rate of tax for individuals is determined after making a reasonable estimate of the amount of taxable income for the year.  No return will be required if no tax is due (for example, for disposals covered by private residence relief).

Entrepreneurs’ Relief

Entrepreneurs’ Relief provides for a lower rate of Capital Gains Tax (10%) to be paid when disposing of all or part of a business where certain criteria are met, subject to a lifetime limit of £1 million of qualifying gains.

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