MHA | Surprising reduction in CGT allowance will increase admin more…

Surprising reduction in CGT allowance will increase admin more than tax receipts

Posted on: November 18th 2022 · read

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The reduction in the Capital Gains Tax (CGT) allowance means many small gains will now have to be reported to HMRC, increasing compliance costs without boosting tax receipts significantly.

The reduction in the annual allowance for CGT was a surprise. The previous allowance meant many small gains did not need to be reported to HMRC. The reduction will increase the compliance burden for many smaller investors and also owners of second properties who may wish to sell post April 2023.  

The increase in taxation from this measure will not be great, so the main impact will be an extra administration burden as small investors deal with self-assessment returns and property investors deal with CGT returns. However, with the increase in the Bank of England base rate, we should see some property investors looking to exit the market, and the decrease in annual allowance will see their overall net profit reduce if they sell after 6 April 2023. 

For further guidance on any of the tax measures discussed in this article, please contact your usual MHA advisor or Contact Us.

Read the latest tax commentary - visit our dedicated hub where we will be providing resources, advice and practical guidance on what these tax measures mean for you and your business, to help you prepare and manage their impact.

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