The Budget 2015 – Capital Taxes

Capital Gains Tax Rates and Allowances

From April 2015 the annual exemption will increase to £11,000.

The rate of tax will be 18% to the extent that there is unused basic rate tax band, and 28% thereafter. These rates are unchanged.

Disposals qualifying for Entrepreneurs Relief will continue to be taxed at 10% subject to a lifetime limit of £10,000,000 for each individual.

Entrepreneurs Relief

From 18 March 2015 Entrepreneurs Relief will not be available on disposals of personally owned assets used in a business carried out in a company or partnership unless there is a connected disposal of at least 5% of the shareholding or partnership assets. From the same date there are amendments to the definition of a trading company or group.

Non-Residents

From April 2015, non-residents will be subject to Capital Gains Tax on the disposal of UK residential property. The rate will be at 28% or 18% for individuals, and 20% for companies.

A persons residence will not be eligible for Principal Private Residence Relief for any tax year unless they were either resident in the same country as the property during that tax year, or they spent at least 90 midnights in the property.

Pension Funds on Death

Where the first payment to a beneficiary of a pension fund takes place after 6 April 2015 then anyone who dies under the age of 75 will be able to give their remaining fund to anyone free of tax. It must be transferred into the names of the beneficiary within 2 years of death, and they can then take money from the fund as required.

Anyone aged 75 or over can pass their fund to a beneficiary who can then draw on it as required and pay tax at their marginal rate.

Similar changes to the treatment of annuities that continue to be paid after death will be introduced. Thus if a person dies under the age of 75 and they had a guaranteed term or joint life annuity then the beneficiary will receive the payments free of tax.