Taxation of Chargeable Gains Act 1992 section 1K

Annual exempt amount

Section 1K provides for an annual exempt amount that is deducted from an individual's chargeable gains before capital gains tax is calculated, and sets out the rules governing how and when that deduction is applied.

• The annual exempt amount is £3,000, which is deducted from an individual's chargeable gains for the tax year, but only so far as is needed to eliminate those gains.
• The deduction is made after current-year allowable losses have been set off, but before any brought-forward or, in the case of death, carried-back losses are applied — and it may be allocated against whichever gains are most beneficial to the taxpayer.
• Individuals who claim the remittance basis, or who make a foreign gain claim, a foreign income claim, or a foreign employment election for the tax year, lose their entitlement to the annual exempt amount for that year.
• Personal representatives of a deceased individual may use the annual exempt amount for the tax year of death and the following two tax years, and separate provision is made for trustees under Schedule 1C.