Capital gains annual exempt amount - the exempt amount will be reduced from £12,300 to £6,000 from April 2023, further reducing from April 2024 to £3000
Not sure the rationale in this cut but one thing is clear the chancellor is trying his best to strife growth.
There are other economic implementations in this cut
How will this effect you as an investor?
I can barely fill up my ISA, and I use the CGT allowance to utilise multiple accounts outside of the annual deposit limit. The reduction of CGT allowance would further restrict my ability this.
To be fair, we can invest 20k of new funds a year tax free, and then get an additional 12.3k of CGT and 2k of income allowance a year. Not many can utilise all 3 let alone the 20k, why not simplify it, and just have the 20k ISA allowance?
Have everything outside an ISA taxable at source and at the same rate, allowing historical losses to carry forward. For multiple accounts it would require a linked up tax system, but simplifying the tax rules would make that so much easier.
This is a bit of a ball ache as I’ve used up my Isa allowance and could become liable under the new thresholds.
Thankfully I saw this coming somewhat, so I sold my GIA holdings during the recent rally. I’m saving some in cash to add to my Isa come April and the rest will go into my pension.
It’s not ideal as I’d have preferred easier access to all of this money in the short/medium-term.
I may also put some into VCTs which, I think I’m right in saying, remain free from capital gains or dividends tax and offer a 30% upfront income tax relief if you continue to hold for five years.
I would not classify ISA as flexible as invest account due restrictions
Not sure if the thought about this properly
Personally I disagree with the lowering of the Capital Gains Tax allowance but the government has got to raise money some way and unfortunately this can only be achieved through higher taxation. I do think cutting it to £3000 in April 2024 is a bit too excessive and it should be fixed at £6000 allowance + your ISA allowance. They should’ve also raised the ISA allowance from £20,000 to £25,000 to better account for the high inflation environment we are currently in.