The Capital Gains Tax (Annual Exempt Amount) Order 2018

EXPLANATORY NOTE

(This note is not part of the Order)

Section 3 of the Taxation of Chargeable Gains Act 1992 (c.12) (“TCGA”) provides that an individual shall not be chargeable to capital gains tax in respect of so much of his taxable amount for any year of assessment as does not exceed the exempt amount for that year. Subsection (2) specifies the annual exempt amount (“AEA”) as £11,300. Subsection (3) provides that if there is an increase in the consumer prices index (“CPI”) that is deemed by subsection (3A) to be a relevant increase, the AEA is increased in relation to a tax year by reference to a formula prescribed by subsection (3B) unless Parliament otherwise determines.

Subsection (4) requires the Treasury to make an Order before the start of the tax year showing the amount arrived at by applying that formula. The AEA for the tax year 2017-18 was £11,300. This Order shows that the AEA for the tax year 2018-19 is £11,700.

The 12 month percentage increase in the CPI for the year ending September 2017 was 3%. In accordance with the formula prescribed by subsections (3) to (3B) the AEA has been increased by 3% and rounded up to the nearest £100.

The CPI percentage change is a publication of the Office of National Statistics and can be found at:

http://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/d7g7/mm23

or by writing to Customer Contact Centre, Office for National Statistics, Room D265, Government Buildings, Cardiff Road, Newport, South Wales NP10 8XG.

A Tax Information and Impact Note covering this instrument will be published on the website at:

https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins