Capital Gains Tax
Rate of tax and annual exemption
The rate of CGT remains 18% for those whose total taxable income and gains for the year are below £31,865, and 28% for gains which are above that figure. The annual exempt amount for CGT increases by £100 to £11,000. This is below the normal increase in line with the consumer prices index.
Trustees continue to be liable to CGT at 28% after deducting half the normal annual exemption (£5,500). The annual exemption is shared between trusts set up by the same settlor since June 1978, subject to a minimum of £1,100.
Only or main residence relief
It has been confirmed that the exemption of gains on a property that has been a taxpayer’s only or main residence will be restricted. To allow for delays in selling a home, the last 36 months of ownership have been exempted, even if the taxpayer no longer lives there. This gives a significant benefit to someone who rents out a former home, or has two properties each of which has at some point been the main residence. For disposals on or after 6 April 2014, the exempt period will be reduced to 18 months. The 36-month rule is retained where the owner is disabled or has moved into a care home. The change has no effect on someone who lives in their home right up to the time they sell it.