Record Capital Gain Tax Collected From Tax Payers in 2017-18

capital gain tax

Capital gains tax revenue hit a record new high of £8.8bn for the 2017-18 tax year, as 281,000 taxpayers paid a bill for selling valuables. Revenue from capital gains tax (CGT) increased 14% compared with 2016-17. The bulk of the bill was paid by high earners who made gains of £1m or more, though these individuals accounted for just 3% of all CGT taxpayers.

Consistent Trend in Tax Collection

The increase reflects a consistent trend over the last four years, as the Treasury continues to raise substantial tax take from CGT. The amount of gains liable for CGT also shot up 13% from the previous year’s £51.2bn. Since 2010-11, the Treasury has seen CGT revenues double from £4.31bn to £8.8bn a year.

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However, in case of trusts, the number of taxpayers, amount of gain and amount of tax all decreased. Historically the number of CGT liable trusts and their chargeable gains and tax paid have been volatile.

ER Claiming Taxpayers

Entrepreneurs’ relief was used in over a quarter (27%) of the disposals, which had a value of £2.4bn. This percentage is broadly similar to preceding years. The total number of taxpayers claiming ER increased by 6% in 2017-18 compared with the previous year but is still less than the number of ER taxpayers in 2015-16, which was a record high. There were corresponding increases of 8% in the gross ER gains and ER tax liability for 2017-18 compared with last year.

London and the South East of England made up 41% of individuals who were liable to CGT in the UK in 2017-18.

Changes to CGT rules

From 29 October 2018, in addition to existing qualifying conditions for entrepreneurs’ relief, shareholders are also entitled to either at least 5% of the distributable profits and net assets of a company or at least 5% of the proceeds in the event of a company sale to claim the relief.

Read Govt Perspective on Capital Gain Tax

From 6 April 2019, the minimum period throughout which the qualifying conditions for ER must be met was extended from 12 to 24 months. Also, individuals whose shareholding is ‘diluted’ below the 5% qualifying threshold for entrepreneurs’ relief as a result of a new share issue are allowed to obtain relief for gains up to that time.

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