Budget 2014 – Capital Gains Tax

Annual exemption

The personal annual capital gains tax exemption for the 2014-15 tax year increases to £11,000. The exemption for trusts is half of the personal exemption.

The rates of capital gains tax remain at 18% for basic rate taxpayers, and 28% for higher rate taxpayers.

 

Private residence relief  

In the autumn statement the Chancellor announced that with effect from 6 April 2014 the legislation would be changed so that the final period exemption for capital gains tax on the sale of your home will be reduced from 36 months to 18 months. This relief applies to people who stop living in a house which has at some time been their main residence, and was designed to stop people having to pay tax on part of a capital gain incurred if it took time for them to sell their home.

 

Non-Residents

The government plans to introduce a CGT on future gains made by non‑residents disposing of UK residential property, from April 2015.  A new consultation document on how to introduce this charge should be issued in the near future..

 

Employee share ownership

Following a consultation launched in the 2013 Budget, the government will introduce 3 new tax reliefs to encourage and promote indirect employee ownership. These rules will, from April 2014 allow exemptions from Capital Gains Tax and Inheritance Tax if shares are held by employee ownership trusts, providing qualifying conditions are met.

An additional change is that from October 2014, bonus payments made to employees of indirectly employee-owned companies which are controlled by an employee ownership trust will be exempt from income tax up to a cap of £3,600 per annum.

 

Share Incentive Plans and Save As You Earn limits

The Share Incentive Plan annual limits will increase to £3,600 per year, and the maximum monthly amount that an employee can contribute to Save As You Earn savings arrangements will increase from £250 to £500 from 6 April 2014.

 

Business Asset Roll-over Relief

Roll-over relief allows capital gains tax and corporation tax on chargeable gains to be deferred where the proceeds from certain qualifying assets are reinvested into new qualifying assets.

Todays Budget confirmed that legislation will be introduced to include payment entitlements under the Basic Payment Scheme within the qualifying classes for roll-over relief.  This measure ensures that farmers are not disadvantaged by changes to the European Union’s agricultural subsidy scheme, when payments under the Single Payment Scheme will be replaced in 2014 by the Basic Payment Scheme.

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Jan 24

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