{"id":12292,"date":"2026-03-06T16:51:23","date_gmt":"2026-03-06T16:51:23","guid":{"rendered":"https:\/\/www.wealthtime.com\/advisers\/?post_type=blog&p=12292"},"modified":"2026-03-17T12:45:43","modified_gmt":"2026-03-17T12:45:43","slug":"cgt-exemption-use-it-or-lose-it","status":"publish","type":"blog","link":"https:\/\/www.wealthtime.com\/advisers\/blog\/cgt-exemption-use-it-or-lose-it\/","title":{"rendered":"CGT exemption: Use it or lose it"},"content":{"rendered":"\n

Tony Wickenden, Technical Connection<\/p>\n\n\n\n

As the end of the tax year approaches, serious consideration should be given to any unused allowance or exemption that is only available on a \u201cuse it or lose it\u201d basis \u2014 because it cannot be carried forward to the next tax year. One of these is the annual Capital Gains Tax (CGT) exemption of \u00a33,000.<\/strong><\/p>\n\n\n\n

So, let\u2019s examine the realities that need to be considered in relation to its use:<\/p>\n\n\n\n

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  1. Since the change to the CGT rates that happened on 30 October 2024 (24% for additional and higher rate taxpayers and 18% for basic rate taxpayers) the tax benefit from using the exemption will be \u00a3720 and \u00a3540 respectively.<\/li>\n\n\n\n
  2. Where a disposal was going to take place anyway (for economic\/commercial reasons) any relief\/exemption is to be welcomed.<\/li>\n\n\n\n
  3. If action is taken purely on tax grounds, then a cost\/benefit assessment<\/strong> needs to be undertaken:
    The benefit <\/strong>is the tax saving illustrated above in point 1 \u2013 but it will not be a current benefit. At the earliest it will, in most cases, be secured when the tax would otherwise be due on the disposal in January 2027. But where the investor wishes to bank the use of the exemption but remain invested, a disposal followed by reacquisition will be necessary. In that case the benefit will be realised in the shape of a lower chargeable gain when an eventual permanent disposal of the asset is made. At that point the gain will be measured taking account of the acquisition price when the reinvestment was made, which will be higher to the extent of the annual exemption used earlier. It\u2019s also important to keep in mind that to achieve the desired outcome it will not be possible to reacquire the same assets as those disposed of within 30 days of the disposal. As a result, it will be necessary to stay out of the market for that length of time, or reacquire something similar but not identical, or have someone else who is closely associated with you (e.g. a spouse), make the reacquisition.
    The cost <\/strong>will be seen in the costs associated with the disposal and, where relevant, reacquisition. Both current costs are incurred to secure a future benefit. There will also be the time and effort cost of the action(s).<\/li>\n<\/ol>\n\n\n\n

    Used regularly to raise the eventual acquisition price, this strategy can deliver worthwhile eventual CGT saving. However, the drop in the annual CGT exemption from \u00a312,300 (in tax year 2022\/23) to its current level of \u00a33,000 cannot be ignored \u2013 though it is ameliorated somewhat by the additional value of the saving at those higher rates.<\/p>\n\n\n\n

    Consider this comparison: <\/strong><\/p>\n\n\n\n

    \"\"<\/figure>\n\n\n\n
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    \"Tony<\/figure>\n<\/figure>\n<\/div>\n\n\n\n
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    The drop in the annual CGT exemption from \u00a312,300 (in tax year 2022\/23) to its current level of \u00a33,000 cannot be ignored \u2013 though it is ameliorated somewhat by the additional value of the saving at those higher rates.<\/p>Tony Wickenden, Technical Connection<\/cite><\/blockquote><\/figure>\n<\/div>\n<\/div>\n\n\n\n

    Read the next article<\/strong><\/p>\n\n\n\n

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