Capital gains hit and inheritance tax frozen
Chancellor Hunt has cut the capital gains tax (CGT) annual exemption by over 75% and frozen all the inheritance tax nil rate bands for the 19th year in a row.
Capital gains tax
The CGT annual exemption will be cut from £12,300 to £6,000 with effect from 6 April 2023 and halved again to £3,000 in April 2024.
The rates of CGT remain at 10% and 20% for most assets, but 18% and 28% for residential properties and carried interest, which is treated as a gain. However, there is scope for further announcements on CGT rates to be made in the 2023 Spring Budget.
Inheritance tax
The inheritance tax nil rate band was fixed at £325,000 per person in April 2009, and it will now remain at that level until April 2028.
The residence nil rate band, which was introduced in 2017/18 at £100,000, then gradually rose to £175,000 in 2020/21, will also be fixed at that level until April 2028. The residence nil rate band can only be claimed where the deceased’s main home is left to a direct descendant, step-child or adopted child. It thus discriminates against the childless.
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