Taxation of Chargeable Gains Act 1992 section 1L

Increasing annual exempt amount to reflect increases in CPI

Section 1L provides a mechanism for automatically increasing the annual exempt amount for capital gains tax in line with inflation, as measured by the consumer prices index (CPI).

• The annual exempt amount is increased each year if the CPI for September is higher than it was in the previous September, with the increase matching the percentage rise in the index.
• Any resulting increase is rounded up to the nearest £100.
• Once increased, the new amount replaces the previous figure and becomes the baseline for future calculations.
• If an increase applies, the Treasury must make a formal order before the start of the relevant tax year confirming the new amount.