Capital Gains Tax
There were some unexpected announcements in this years’ Budget in relation to the reduction in CGT rates from April 2016 and changes to Entrepreneurs’ Relief.
The annual exempt amount, which is the amount of gain that a person can make on the disposal of an asset before they have to pay any CGT, which is currently £11,100, will remain the same for the upcoming 2016/2017 tax year.
The main CGT rates from April 2016 will be as follows:
- basic rate tax band 10% (reduced from 18%)
- higher rate tax band 20% (reduced from 28%)
However, the above rates are not available when a gain is made on the disposal of a residential property that is not your only or main principal private residence. In this situation any gains will be taxed at the rates of 18% (basic rate tax band) or 28% (higher rate tax band).
Entrepreneurs’ Relief (ER)
The tax rate for disposals which qualify for ER remains at 10%, however some changes were announced in today’s Budget as follows:
- to encourage investment ER is to be extended to individuals who from 17 March 2016 invest in newly issued shares in unlisted trading companies where the shares are held for more than 3 years from 6 April 2016
- other changes have been made to amend some previously announced anti avoidance measures which mainly restricted the availability of ER when a business incorporated or was sold to a family member. These changes have been backdated to 3 December 2014 and 18 March 2015.
If you have any queries regarding the CGT announcements, or if you are thinking of disposing of an asset, please speak to one of our Tax Specialists on 01228 711888.