Capital Gains Tax The Annual Exempt Amount, the total gain that can be achieved without paying any tax, is increased from the current level of £11,100 to £11,300 from 6th April 2017. The Annual Exempt Amount for most trustees is half these amounts.
The rates of Capital Gain Tax remain unchanged. The taxable gain is added to income for the year and the rate payable depends on whether the total income exceeds the higher rate threshold. Any Capital Gains that take the total income up to the threshold is taxed at 10%. Capital Gains on surplus income above the threshold is taxed at 20%.
The above rates do not apply to Capital Gains on the sale of residential property, other than your Principal Private Residence which remains tax free. These are taxed at higher rates of 18%, and 28% on any surplus above the higher rate threshold.
Gains eligible to Entrepreneurs Relief remain taxable at 10%.
Inheritance Tax
Inheritance tax is currently charged at 40% on the proportion of an individual’s estate exceeding the ‘nil-rate band’ of £325,000. Married couples and registered civil partners can already pass any unused nil-rate band to one another on death.
As previously announced April 2017 sees the introduction of the new ‘residence nil-rate band’ (RNRB). An additional nil-rate band will be introduced for each individual to enable a ‘family home’ to be passed wholly or partially tax-free on death to direct descendants such as a child or grandchild. A step-child, adopted child or fostered child is also regarded as a direct descendant.
The RNRB will increase over the next few years as follow:
2017/18 £100,000
2018/19 £125,000
2019/20 £150,000
2020/21 £175,000
The additional band can only be used in respect of one residential property. The property does not have to be the main family home, although it must, at some point, have been a residence of the deceased. There will be a tapered withdrawal of the RNRB for estates valued at more than £2m. This will be at a withdrawal rate of £1 for every £2 over this threshold.
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