The Capital Gains Tax (Annual Exempt Amount) Order 2017

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 £11,100. Subsection (3) provides that that amount is increased, unless Parliament otherwise determines, in relation to a tax year by reference to a formula prescribed by subsection (3B) if there has been a relevant increase in the consumer prices index (“CPI”).

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. This Order shows that the AEA for the tax year 2017-18 is £11,300.

The AEA for the tax year 2015-16 was set at £11,100 by Parliament in the Finance Act 2014 (c.26).

Since there was no relevant increase in the CPI for the tax year 2016-17 there was no corresponding increase to the AEA and so no Order was made in respect of that tax year.

The 12 month percentage increase in the CPI for the year ending September 2016 was 1%. In accordance with the formula prescribed by subsections (3) to (3B) the AEA has been increased by 1% and rounded up to the nearest £100.

The CPI (% 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 NP0 8XG.

A Tax Information and Impact Note has not been prepared for this instrument as it gives effect to previously announced policy and relates to routine changes to an allowance in accordance with a predetermined indexation formula.