Capital Taxes

Capital gains tax (CGT) annual exempt amount

The annual exempt amount for 2015/16 is £11,100.

Entrepreneurs’ relief

Disposals of shares in a company that is not a trading company in its own right will not qualify for capital gains tax entrepreneurs’ relief (ER). This targets certain structures set up under the joint venture rules and ensures that individuals can only benefit from ER if they hold at least a 5% stake directly in a company carrying on a trade. Individuals will also be prevented from claiming ER on the disposal of personal assets used in a business carried on by a company or a partnership, unless they are disposed of in connection with a disposal of at least a 5% shareholding in the company or a 5% share in partnership assets. The changes affect disposals on and after 18 March 2015.

Gains that are eligible for ER, but are deferred into investments that qualify for the enterprise investment scheme (EIS) or social investment tax relief will remain eligible for ER when the gain is realised. This change, which was announced in the Autumn Statement 2014, benefits qualifying gains on disposals that would be eligible for ER from 3 December 2014.

Individuals will not be able to claim ER on disposals of goodwill on a transfer of a business to a related close company from 3 December 2014, as previously announced.

The government will review the ER treatment of academics who dispose of shares in spin-out companies that use intellectual property to which they have contributed.


SAVER – Share your gains. If you are a higher or additional rate taxpayer, you will pay 28% on all capital gains above your annual exemption. If your spouse or civil partner is a basic rate taxpayer, they will only pay 18% on gains above their annual exemption until their basic rate tax band is exhausted.


Residential property

Private residence relief will be restricted where a property is located in a jurisdiction in which a taxpayer is not tax resident. In these circumstances the property will only be regarded as the person’s only or main residence for a tax year in which the person meets a 90-day test for time spent in the property over the year.

Non-UK resident individuals, trusts, personal representatives and narrowly controlled companies will become subject to tax on gains on the disposal of UK residential property after 5 April 2015.

Capital gains tax wasting assets

Legislation will clarify that the capital gains exemption for wasting assets only applies if the person selling the asset has used it in their own business. The change will take effect from 1 April 2015 for corporation tax and 6 April 2015 for capital gains tax.

Inheritance tax (IHT) threshold

The IHT threshold remains at £325,000 for 2015/16.

Deeds of variation

The government will review the use of deeds of variation for inheritance tax planning.


THINK AHEAD – Review your will. It may become harder for your family to rewrite the will using a deed of variation.


Inheritance tax and trusts

New rules will target tax avoidance through the use of multiple trusts. As announced in the Autumn Statement 2014, the government will not introduce a single settlement nil-rate band.

Medals

The existing inheritance tax exemption for medals and other decorations for valour or gallantry is being extended, from 3 December 2014, to all decorations and medals awarded to the armed services or emergency services personnel and to awards made by the Crown for achievements and service in public life, as announced in the Autumn Statement 2014.

Annual tax on enveloped dwellings (ATED)

The ATED charges will increase by 50% above inflation for residential properties worth more than £2 million for the chargeable period 1 April 2015 to 31 March 2016, as announced in the Autumn Statement 2014.

The related capital gains tax charge on disposals of properties liable to ATED will be extended from 6 April 2015 to residential properties worth over £1 million and up to £2 million. From 6 April 2016 the charge will apply to residential properties worth over £500,000 and up to £1 million. These changes were announced in the Budget 2014.

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