Capital Taxes 2012

Capital gains tax (CGT) annual exemption

The CGT annual exempt amount will remain at its 2011/12 level of £10,600 for 2012/13. From 6 April 2013, it will rise in line with the consumer prices index (CPI) instead of the retail prices index (RPI), as announced in the Budget 2011.

CGT regime and non-residents

From April 2013 and following consultation about the proposals, the CGT regime will be extended to cover gains on disposals by non-resident companies (and other non-natural persons) of UK residential property and shares or interests in such property.

Foreign currency gains From 6 April 2012, gains on foreign currency deposits will be exempt from capital gains tax. If you have foreign currency accounts, now is the time to review whether to convert them to sterling while the pound remains weak.

 

Single payment scheme (SPS) and CGT roll-over relief

As previously announced, Finance Bill 2012 will preserve the availability of CGT roll-over relief for farmers and companies carrying on a farming business who dispose of or acquire entitlements under the EU SPS.

Inheritance tax (IHT): spouses and civil partners domiciled outside the UK

Ahead of legislation in the Finance Bill 2013 there will be consultation on:

  • Increasing the IHT-exempt amount that a UK-domiciled individual can transfer to their non-UK domiciled spouse or civil partner; and
  • Allowing individuals who are domiciled outside the UK and who have a UK-domiciled spouse or civil partner to elect to be treated as domiciled in the UK for the purposes of IHT.

Review your will The new rules on charitable legacies mean you could reduce the inheritance tax bill on your estate by 10% from 6 April 2012. However, it is most unlikely that your existing will is structured to make the most of this change.

 

IHT: periodic charges on trusts

There will be consultation about simplifying the calculation of IHT periodic and exit charges for trusts, and any legislation will be in Finance Bill 2013.

IHT: reduced rate for charitable donations

As previously announced, for deaths on or after 6 April 2012, a lower rate of IHT of 36% will apply where 10% or more of a deceased person’s net estate is left to charity.

IHT: threshold

The IHT nil-rate band (NRB) will be frozen at £325,000 until April 2015. Also, as previously announced, the NRB will then rise in line with the CPI.

Stamp duty land tax (SDLT) rates

A new SDLT rate of 7% for residential properties over £2 million will apply from 22 March 2012.

A 15% rate of SDLT will apply to residential properties over £2 million purchased by companies and certain other non-natural persons from 21 March 2012. In addition, there will be consultations on the introduction of an annual charge on residential properties valued over £2 million already owned by such persons, with the intention that the measure will come into effect in April 2013.

The Government will consult on measures to simplify SDLT rules for non-standard leases.

Stamp duty land tax (SDLT)

Bulk purchasers of residential property will be able to claim a new relief under which the rate of SDLT is determined by using the mean consideration per dwelling instead of the aggregate consideration. The relief will be available for transactions on or after Royal Assent to the Finance Bill 2011. In the autumn, the Government will announce the outcome of its review of the SDLT relief for first-time buyers.

Legislation in the Finance Bill 2011 will aim to ensure that SDLT-avoidance schemes exploiting three areas do not work. The changes clarify the relationship between the rules for sub-sales and alternative finance, narrow the definition of ‘financial institution’ for alternative finance and counter the effect of an engineered reduction in market value when properties are exchanged

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