Budget 2008

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• Withdrawn for disposals after 5 April 2008.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Withdrawn for disposals after 5 April 2008.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	2½

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	9½
4	90	36	18	9
5	85	34	17	8½
6	80	32	16	8
7	75	30	15	7½
8	70	28	14	7
9	65	26	13	6½
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.