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:
The relief will apply to gains arising on:
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
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