Capital taxes

Capital gains tax (CGT): annual exempt amount

The annual exempt amount for individuals and personal representatives will rise to £12,300 for 2020/21, while the amount for most trustees will increase to £6,150 (minimum £1,230).

Entrepreneurs’ relief

For disposals on or after 11 March 2020, the lifetime limit on gains eligible for Entrepreneurs’ Relief, which offers a reduced 10% rate of CGT on qualifying disposals, will be reduced from £10 million to £1 million. There will be rules that apply to forestalling arrangements entered into before Budget day.

Private residence relief

From 6 April 2020, lettings relief of up to £40,000 will only apply where the owner of the property shares occupancy with the tenant. The final period exemption for CGT will be reduced from 18 months to 9 months. There will be no changes to the 36-month final period exemption available to disabled individuals or people in a care home.

Inheritance tax (IHT)

The IHT nil rate band will remain at £325,000 for 2020/21.

The residence nil rate band (RNRB) will increase to £175,000 from 6 April 2020, as set out in existing legislation.

Non-UK resident stamp duty land tax (SDLT) surcharge

A 2% SDLT surcharge will be introduced from 1 April 2021 for non-UK residents purchasing residential property in England and Northern Ireland.

Annual tax on enveloped dwellings (ATED)

The ATED for 2020/21 will be increased in line with inflation.

Property value

Charge for tax year
2020/21

Charge for tax year
2019/20

More than £500,000 but not more than £1m

£3,700

£3,650

More than £1m but not more than £2m

£7,500

£7,400

More than £2m but not more than £5m

£25,200

£24,800

More than £5m but not more than £10m

£58,850

£57,900

More than £10m but not more than £20m

£118,050

£116,100

More than £20m

£236,250

£232,350

 

Think ahead
IHT simplification remains on the agenda.
Now may be a good time to review making lifetime gifts before the tax rules are ‘simplified’ into something less generous.

 

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