england-and-wales tax-law rental-property real-estate
Does the 6th April 2023 date for reduced CGT personal allowance apply to date of sale, or exchange of contracts?
<p>We are selling a rental property and as such Capital Gains Tax (CGT) applies on profits. <a href="https://www.gov.uk/government/publications/reducing-the-annual-exempt-amount-for-capital-gains-tax/capital-gains-tax-annual-exempt-amount" rel="noreferrer">On 6th April 2023, the personal CGT allowance is being reduced from £12,300 to £6000</a>.</p>
<p>Our sale is likely to complete around this date and with two owners, that means we potentially stand to pay CGT on an additional £12,600.</p>
<p>Somebody told me that the key factor in the date cut-off is when contracts are exchanged for the sale, rather than when the sale is completed. But I cannot find any information supporting or rejecting this claim. Can anyone give an evidence-based answer either way?</p>

<p>It's the date of exchange, referred to as the &quot;disposal date&quot;.</p>
<p>See the <a href="https://www.gov.uk/capital-gains-tax" rel="noreferrer">gov.uk</a> guidance:</p>
<blockquote>
<p>Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.</p>
</blockquote>
<p>And the HMRC <a href="https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg-app18-230" rel="noreferrer">Capital Gains Manual</a>:</p>
<blockquote>
<p><em>What date did you exchange contracts?</em></p>
<p>This is the disposal date. The contract exchange date is usually when the buyer and seller exchange contracts and is usually when the new owner pays a deposit.</p>
<p>The tax year of exchange is the tax year that the disposal is chargeable in, even if completion of the contract occurs in a later tax year.</p>
</blockquote>
