The Capital Gains Tax (Annual Exempt Amount) Order 1993

This Order specifies £6,000 as the amount which, under section 3 of the Taxation of Chargeable Gains Act 1992 (“section 3” and “the 1992 Act” respectively), is the exempt amount for the year 1993—94 unless Parliament otherwise determines.

The exempt amount for the year 1992—93 was specified by S.I.1992/626 as £5,800. The amount of £6,000 is the amount for 1992—93 increased by the amount of the percentage increase in the retail prices index for December 1992 over that for December 1991, and rounded up to the nearest £100 in accordance with section 3(3).

Under section 288(2) of the 1992 Act, “retail prices index” has the same meaning as in the Income Tax Acts; and “retail prices index” is defined in section 833(2) of the Income and Corporation Taxes Act 1988 (c. 1), as amended by paragraph 5 of Schedule 2 to the Transfer of Functions (Economic Statistics) Order 1989 (S.I.1989/992), as the “general index of retail prices (for all items) published by the Central Statistical Office of the Chancellor of the Exchequer”. The retail prices index for December 1991 is 135.7 and for December 1992 139.2 (based on January 1987 as 100); (see Table 6.1 on page S58 of the February 1993 number of the Employment Gazette, the official journal of the Department of Employment.)

The exempt amount has several applications for capital gains tax. Under section 3(1) an individual’s gains for a year of assessment are chargeable to tax only to the extent that they exceed the exempt amount; and under section 3(6) an individual may, if appropriate, and unless an inspector otherwise requires, satisfy his obligation to make a return of chargeable gains by stating that his gains do not exceed the exempt amount for the year, and that the proceeds of his disposals for the year do not exceed an amount equal to twice the exempt amount.

Schedule 1 to the 1992 Act (“Schedule 1”) provides for section 3(1) to apply, subject to detailed rules, to trustees of settlements for mentally disabled persons or persons in receipt of attendance allowance or of a disability living allowance; and, as to one half of the exempt amount, to trustees of other settlements. Schedule 1 also provides for section 3(6) to apply to trustees, subject to detailed rules and to modifications. By virtue of section 3(7), section 3(1) and section 3(6) also apply, in certain circumstances, to personal representatives.