CGT rates
For 2013/14 the rates of CGT are 18% to the extent that any income tax basic rate band is available and 28% thereafter. The rate for disposals qualifying for Entrepreneurs’ Relief is 10% with a lifetime limit of £10 million for each individual. The rates and limits remain unchanged for 2014/15.
CGT annual exemption
The CGT annual exemption of £10,900 for 2013/14 will be increased to £11,000 for 2014/15.
CGT – Private Residence Relief
The Private Residence Relief is available for periods of occupation of a property as a private residence and for certain other periods when the property is not being lived in. Currently, the final period of ownership up to a maximum of 36 months is exempt whether or not the property is your private residence during this period. For disposals on or after 6 April 2014 this final period exemption will be reduced to 18 months. There may be exceptions for disabled individuals and long term residents in care homes.
CGT – non-residents and UK residential property
From April 2015 a CGT charge will be introduced on future gains made by non-residents disposing of UK residential property. A consultation on how best to introduce this will be published shortly.
Business roll-over relief
Roll-over relief allows CGT to be deferred on gains made on certain qualifying assets where the proceeds are used to purchase other qualifying assets within a specified period of time. With effect from 20 December 2013 a payment entitlement under the new EU Basic Payment Scheme for farmers will become a qualifying asset.
IHT nil rate band
The IHT nil rate band remains frozen at £325,000 until 5 April 2018.
IHT exemption for emergency service personnel
The Government will consult on extending the existing IHT exemption for members of the armed forces whose death is caused or hastened by injury while on active service to members of the emergency services.
Changes to the trust IHT regime
Certain trusts, known as ‘relevant property trusts’, provide a mechanism to allow assets to be held outside of an individual’s estate for the purpose of calculating a 40% IHT liability on the death of an individual. The downside is that there are three potential points of IHT charge on relevant property trusts:
- a transfer of assets into the trust is a chargeable transfer in both lifetime and on death
- a charge has to be calculated on the value of the assets in the trust on each ten-year anniversary of the creation of the trust
- an exit charge arises when assets are effectively transferred out of the trust.
HMRC wants to simplify these procedures and will consult on proposals to take effect in 2015. Meanwhile, two changes be introduced in Finance Bill 2014:
- simplification of filing and payment dates for IHT relevant property trust charges
- income arising in such trusts which remains undistributed for more than five years may be treated as part of the trust capital when calculating the ten-year anniversary charge.