EXPLANATORY NOTE
(This note is not part of the Order)
This Order specifies £9,200 as the exempt amount for the year 2007-08, by virtue of section 3 of the Taxation of Chargeable Gains Act 1992 (c.12) (“the 1992 Act”), unless Parliament otherwise determines. Section 3(1) of the 1992 Act provides that an individual is chargeable to capital gains tax for a year of assessment only on the amount by which his taxable amount for the year exceeds the exempt amount. Section 3(5) of the 1992 Act provides that an individual’s taxable amount for a year of assessment is the amount of chargeable gains on which he is chargeable to capital gains tax after any available allowable losses have been deducted and any available capital gains tax taper relief has been applied.
By virtue of the Capital Gains Tax (Annual Exempt Amount) Order 2006 (S.I. 2006/871) the exempt amount for the year 2006-07 was specified as £8,800. The amount of £9,200 is the amount for 2006-07 increased by the amount of the percentage increase in the retail prices index for September 2006 over that for September 2005, and rounded up to the nearest £100 in accordance with section 3(3) of the 1992 Act (as amended by section 83 of the Finance Act 1993 (c.34)).
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 22 of Schedule 2 to the Transfer of Functions (Registration and Statistics) Order 1996 (S.I. 1996/273), as the “general index of retail prices (for all items) published by the Office for National Statistics”. The retail prices index for September 2005 is 193.1 and for September 2006 is 200.1 (based on January 1987 as 100) (see Table 3.1 on page 90 of Economic Trends, issue number 636, a National Statistics publication).