Were any changes to Capital Gains Tax (CGT) announced in the Autumn Budget?
Yes, there will be a few changes, but fortunately not an increase in CGT rates. The top rate is still 28% for gains on residential property and 20% for gains on other assets.
Some aspects of the main residence relief will be restricted. For example, under current rules, a person’s sole or main residence can qualify for full relief from CGT even if he/she does not live there for the final 18 months of ownership. The Chancellor announced a proposal to reduce this period to nine months with effect from 6 April 2020. There is no change to the 36-month period applicable in certain limited circumstances. An associated relief, known as “lettings relief”, will also be restricted.
The CGT annual exemption will be increased to £12,000 for the tax year 2019-20. The current level is £11,700.
The Chancellor also confirmed a previous announcement regarding CGT on residential property gains that are not exempt. For disposals on or after 6 April 2020, a payment on account will have to be made, and a return submitted to HMRC, within 30 days of completion.
As from 6 April 2019, CGT will apply to gains made by non-UK residents on disposals of all UK land and buildings (not just residential property as at present). The proposals regarding Entrepreneurs’ Relief are mentioned in one of the answers below.
If you have any questions regarding Capital Gains Tax, please contact Mark Politz on 01892 510000 or email firstname.lastname@example.org or visit our website www.ts-p.co.uk.
What impact will the Autumn Budget have on business?
Entrepreneur's Relief: What do the restrictions mean to business owners thinking of selling their business?
The speculation prior to the announcement was that the Chancellor would take aim at Entrepreneurs’ Relief, with many SME and family businesses fearing the relief would be scrapped. However, instead of scrapping the relief, the Chancellor has made conditions for qualifying stricter. The Government will be extending the minimum ownership period from 12 months to two years. This means that from the 6 April 2019, you will need to have owned an asset for at least two years to qualify.
The Chancellor has also introduced an immediate restriction for qualifying. Shareholders have to be entitled to at least five per cent of distributable profits and net assets of a company to be able to claim the relief as well as five per cent of the ordinary
Investment allowance: Is the rise good for business?
The investment allowance, which lets businesses deduct qualifying capital expenditure from its taxable profits to spend on business equipment, will be increased from £200,000 to £1million. This will be welcome news for owners seeking to expand and invest in their business in the coming year by benefiting from this allowance.
If you have any questions regarding the Autumn Budget and its effect on your business, please contact Connor Iontton on 01322 623700 or email email@example.com or visit our website www.ts-p.co.uk.