In 2024/25, the Capital Gains Tax Annual Exempt Amount (AEA) is £3,000 for individuals – reducing from £6,000 in 2023/24. This is a ‘use it or lose it’ allowance, in that any unused amount cannot be carried forward to a subsequent tax year.
The objective of the Utilising the Capital Gains Tax Annual Exempt Amount (AEA) calculator is to provide an indication of either;
- The amount of the investment / portfolio that can be realised to use the remaining Capital Gains Tax AEA available
or
- The amount of Capital Gains Tax AEA that will be used for the required investment / portfolio withdrawal.
Amount of the investment that can be realised to use the Capital Gains Tax AEA available
To reduce their final Capital Gain Tax liability on final disposal, a client may want to consider using their remaining Capital Gain Tax AEA available each tax year.
This would be calculated by inputting the Capital Gains Tax AEA already used this tax year, the value of current investment(s), and the Capital Gain on those investment(s).
Based upon the information input, this will then show the amount of the investment that needs to be sold (across all funds) and the percentage of the investment (funds).
Any proceeds can then be reinvested into different shares, or into the same shares of the same class in the same company after 30 days.
Alternatively, the proceeds could be invested into different investment wrapper, such as an ISA or pension. Or the proceeds could be gifted to the spouse to invest into the same shares, their ISA or pension.
Amount of Capital Gains Tax AEA that will be used for the required investment withdrawal
For a client that requires a specific withdrawal amount e.g. to fund their ISA, to determine the amount of Capital Gain Tax AEA may be used then the value of current investment, the Capital Gain on those investment, and the withdrawal amount would need to be input.
Based upon the information input, this will then show the percentage that needs to be sold (across all funds).
