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The system of capital gains tax (CGT) for
individuals and trustees changed radically
from 6 April 2008. The changes included
the abolition of taper relief and
indexation allowance and the introduction
of a single rate of CGT of 18%. In
response to pressure from the business
community the Chancellor introduced a new
‘Entrepreneurs’ Relief’ which has the
effect that the first £1m of gains
qualifying for relief will be charged at
an effective rate of 10%.
Gains in excess of £1m will be charged
at 18%. An individual will be able to make
more than one claim for relief, up to a
lifetime total of £1m of gains.
The new relief is broadly based on the
system which applied before taper relief,
Retirement Relief, which some of you may
remember. The rules for Retirement Relief
required you to have been in business for
a number of years but the new rules are
designed to be simpler:
- there is no minimum age limit, and
- relief is generally available where
the relevant conditions are met for a
period of one year.
The relief will apply to gains arising
on:
- the disposal of the whole, or part,
of a trading business that is carried on
by the individual, either alone or in
partnership,
- a subsequent disposal of assets in
use in the business at the time of the
cessation of the business; and
- the disposal of shares in a trading
company, or holding company of a trading
group, provided that the individual owns
broadly a 5% shareholding and has been
an officer or employee of the company.
In addition, certain disposals by
trustees may qualify, as well as disposals
which are associated with other disposals.
HMRC have amended their internal
guidance to give further clarification of
exactly when the relief will be due.
Please do get in touch if you would
like any clarification of the rules and
how they will apply in your circumstances.
Internet link:
Updated HMRC guidance |
