Budget 2008

Capital Gains Tax - Budget 2008 - GT

Capital Gains Tax

Rates

  • From 6 April 2008 flat rate of 18%for individuals and trusts.
  • Pre 6 April 2008 individuals charged at 10%, 20%or 40% depending on their marginal rate of tax, trusts charged at 40%.

Losses

Relief available against gains for:

  • capital losses of the same tax year and those brought forward
  • trading losses of same and following tax year.
Annual exemptions 2008/2009 2007/2008
  £ £
Individuals and personal representatives 9,600 9,200
Certain trusts for disabled persons 9,600 9,200
Other trusts* 4,800 4,600

* Reduced pro-rata if more than one trust per settlor subject to minimum of 10% of full amount.

Chattel exemptions 2008/2009 2007/2008
  £ £
Maximum proceeds 6,000 6,000

Other main exemptions

  • Principal private residence.
  • Treasury stock and qualifying corporate bonds.
  • Qualifying shares in EIS companies, VCT’s, personal equity plans, individual savings accounts and child trust funds.
  • Passenger vehicles.
  • Certain gifts of assets to charities.

Entrepreneurs’ relief

  • Available for disposals made after 5 April 2008.
  • Effective 10%rate on gains within lifetime limit of £1 million.
  • Applies to disposals of trading businesses and certain disposals of shares in trading companies.
  • Trustees can benefit from relief in certain circumstances.
  • No minimum age.
  • Qualifying conditions must be met for 12 months immediately prior to disposal.

Rollover relief

  • Capital gains tax deferral on sale of qualifying assets provided:
    • proceeds reinvested in replacement qualifying assets
    • replacement assets purchased between 1 year before and 3 years after sale*.

* Time limit may be extended at the discretion of HM Revenue & Customs.

Holdover relief

  • Capital gains tax deferral on gifts of qualifying assets including:
    • business assets (including shares in unquoted trading companies)
    • gifts with an immediate charge to inheritance tax
    • heritage properties and maintenance funds.
  • Restrictions apply to transfers into settlor interested settlements.

Small part disposals

  • Relief for part disposals of land may be available where proceeds:
  • do not exceed 20%of the current market value of the holding before disposal; and
  • do not exceed £20,000 in the tax year.

Indexation allowance

  • Withdrawn for disposals after 5 April 2008.
  • Amount of allowance frozen at April 1998 for individuals and trusts.

Taper relief

Withdrawn for disposals after 5 April 2008.

Gains on business assets*

Number of complete years for which asset held Equivalent % rate for
taxpayers at
  % of gain chargeable higher rate lower rate starting rate
Less than 1 100 40 20 10
1 50 20 10 5
2 or more 25 10 5

Gains on non-business assets

Number of complete years after 5 April 1998 for which asset held† Equivalent % rate for
taxpayers at
  % of gain chargeable higher rate lower rate starting rate
Less than 3 100 40 20 10
3 95 38 19
4 90 36 18 9
5 85 34 17
6 80 32 16 8
7 75 30 15
8 70 28 14 7
9 65 26 13
10 more 60 24 12 6

* The definition of business assets is complex and advice should be sought on asset classification.
† Assets held on 17 March 1998 are deemed to have been held for one year at 5 April 1998 for the purposes of this relief.

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