Capital taxes

Capital gains tax (CGT) annual exempt amount

The annual exempt amount, currently £10,900, will rise to £11,000 in 2014/15 and £11,100 in 2015/16, as announced previously.

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.

Business asset rollover relief

From 19 March 2014, companies will not be able to claim rollover relief on the disposal of tangible assets where the proceeds are reinvested in intangible fixed assets. For claims made before 19 March 2014, the measure adjusts the tax cost of the replacement intangible fixed asset, preventing double tax relief being given on any rollover relief claims that have already been made.

Farmers will be able to claim business asset rollover relief on payment entitlements under the new agricultural subsidy basic payment scheme.

Residential property

The final period exemption for CGT private residence relief will be reduced from 36 to 18 months, in most cases from 6 April 2014. Non-UK residents will be liable to CGT on gains accruing from April 2015 on disposals of UK residential property. Both changes were announced in the Autumn Statement 2013.

Remittance basis: CGT and split-year treatment

A correction to the split-year rules in the statutory residence test will ensure that non-UK domiciled remittance basis users are not charged CGT on capital gains they make in the overseas part of a split year of residence.

Inheritance tax (IHT) threshold

As announced in the Budget 2013, the IHT threshold will remain at £325,000 until 5 April 2018.

Trusts simplification

The filing and payment dates for IHT relevant property trust charges will be simplified, as previously announced. Income that remains undistributed for more than five years will be treated as part of the trust capital when calculating the ten-year charge. The government will consult further on the proposal to split the IHT nil-rate band available to trusts and simplify the trust charges.

Trusts with vulnerable beneficiaries

The CGT uplift provisions that apply on the death of a vulnerable beneficiary are extended from 5 December 2013, as previously announced. From 2014/15, the range of trusts that qualify for special income tax, CGT and IHT treatment will also be extended.

IHT: liabilities and foreign currency accounts

Funds held in foreign currency accounts in UK banks will be treated in a similar way to excluded property for the purpose of provisions that restrict how liabilities are deducted from the value of an estate for IHT purposes.

THINK AHEAD - New rules apply to liabilities on death. For example, if you borrowed to buy an asset that qualifies for IHT relief, your potential inheritance tax might now be much more than you expect. You might need to make some changes to your planning.

IHT exemption for emergency service personnel

The government will consult on extending to members of the emergency services the existing IHT exemption for members of the armed forces whose death is caused or hastened by injury while on active service.

Enveloping of residential property

The annual tax on enveloped dwellings (ATED) will have two new bands. Properties worth over £1 million and up to £2 million will be chargeable from 1 April 2015, with an amount of £7,000 in 2015/16. Properties worth over £500,000 and up to £1 million will be chargeable from 1 April 2016, with an amount of £3,500 in 2016/17. The charges will increase each year.

Stamp duty land tax (SDLT)

The threshold for the 15% SDLT rate on residential properties purchased by certain non-natural persons (eg companies) will be reduced and will apply to properties worth over £500,000 for transactions with an effective date from 20 March 2014. The existing £2 million threshold will apply, subject to exceptions, where contracts were entered into before that date.

SDLT charities relief

Legislation will make it clear that a charity can claim relief from SDLT on the proportion attributable to it of the purchase of property jointly with a non-charity. This was announced in the Autumn Statement 2013 and the change will take effect from Royal Assent to the Finance Bill 2014.