Record amounts of capital of gains and tax recorded in 2020 to 2021 tax year

New data published today by HMRC has revealed that in the 2020 to 2021 tax year the total amount of Capital Gains Tax (CGT) liability was £14.3 billion for 323,000 taxpayers.

This liability was realised on £80 billion of gains. The total CGT liability has increased by 42% from the previous year, while the amount of gains and number of taxpayers have increased by 19% and 20% respectively.

HMRC noted that the data showed that record amounts of capital gains and tax were recorded in the 2020 to 2021 tax year.

 Julia Rosenbloom, tax partner at Evelyn Partners commented: “HMRC’s latest annual update shows the continued importance of CGT receipts to the Treasury. While we wait for the new Prime Minister to take office in early September, when tax reforms could subsequently be announced in a new Budget, families may wish to give thought to their tax planning and make the most of their current allowances and the relatively low rates of CGT before any changes are introduced. Anyone who is considering selling a property or business should remember that disposing of large assets can be a lengthy process. However, the risk of taking action in anticipation of changes does need to be considered.

“Even without any changes to CGT, even greater numbers of people are likely to be impacted by CGT over the coming years as a result of a decision in the March 2021 Budget by the then Chancellor Rishi Sunak to freeze the annual £12,300 capital gains allowance until 5 April 2026. This freeze is particularly painful in a period of continued higher inflation and rising property prices which means many more people will be brought into the scope of CGT.     

“Married couples and civil partners can transfer assets between themselves free of CGT, to maximise use of tax allowances. This means couples can make use of two sets of capital gains allowances when selling shares, two sets of ISA allowances to shelter investments from future capital gains and even where some CGT is likely, shifting investments into the name of whichever partner pays a lower tax rate can help reduce a tax bill.”

This Week’s Most Read

Latest IFA Magazine Podcast Episodes

Keep updated on the most important financial events 

Make sure you are an informed

wealth professional..

Adblock Blocker

We have detected that you are using

adblocking plugin in your browser. 

IFA Magazine