Everyone has a CGT annual exemption of £12,300 for 2022/23. This is wasted if you don’t make capital gains in the tax year, as it can’t be carried forward. In 2023/24 the annual exemption will be £6,000 and in 2024/25 it will be cut to £3,000.
If you are planning to dispose of assets that will create capital gains, you can save tax if the disposals are spread over several tax years, but you need to consider the reducing amounts of the annual exemption that will be available.
If the asset must be sold in one go, you could reinvest part or all of the gain in Enterprise Investment Scheme (EIS) shares, but you must be prepared to take a risk. This will defer the gain until the EIS shares are sold. You can sell sufficient EIS shares in later years, so the that the gains chargeable are covered by your annual exemptions.
Gifts to your spouse or civil partner don’t create immediate taxable gains, as the recipient takes over the transferor’s CGT cost. You can use this transfer between spouses to share the ownership of a property, and hence the gain, and thus use two annual exemptions in one tax year on eventual disposal of the asset.
When you give a valuable asset to any other close relative, the disposal is treated like a sale at market value and the deemed gain is taxable. However, where certain assets (e.g. family trading company shares or agricultural property) are given to other family members, a capital gain may be avoided if an appropriate ‘gift relief’ claim is jointly made. This will lead to the recipient having a bigger capital gain on eventual disposal of the asset than would otherwise have been the case.
You should always take specific legal advice when giving away land or buildings, or a share in such property. Stamp Duty Land Tax (or equivalent land taxes in Scotland or Wales) may be payable if the property is mortgaged.
