Capital Gains Tax Autumn Budget 2018

Capital gains tax (CGT) exemption

• CGT annual exemption increases from £11,700 to £12,000 in 2019/20.
• Trustees CGT annual exemption increases from £5,850 to £6,000 in 2019/20 – although this “per trust” limit is diluted where the settlor has created more than one trust subject to a minimum of £1,200 per trust.
• CGT rates at 10%/20% for most gains and 18%/28% (property) remain unchanged.

Principle Private Residence (PPR) relief (from April 2020)

• CGT main residence PPR relief will change, where a property was at some point your main residence, but has since been rented out, with now only that last 9 months of ownership (even if the property is let out), previously 18 months, to be included in the tax free period of ownership when calculating capital gains tax.  This excludes when you go into a care home or if you are disabled, where the last 36 months of ownership (the pre 2015 level for all) remains intact.
• Lettings Relief which allows you to claim up to an additional £40,000 of tax free capital gain on a previous main residence and now rented out property, will change to only be available to those property owners who stay in the property and take in a lodger or who go into a care home or are disabled.  Effectively 'killing off' Lettings Relief for most landlords.

Entrepreneurs’ relief

Shareholders and directors who realise gains on the disposal of shares in their company need to 'own' least 5% of the distributable profits and net assets of a company to claim the relief from 29 October 2018

Minimum period of share ownership increases from 12 months to 24 months for disposals made on or after 6 April 2019. In addition from next April, the relief will still be available to business owners who secure external investment but their shareholding is reduced below 5% will be able to claim the relief on gains made up to that point.

Gains made by non-residents on UK immovable property

From April 2019 tax will be charged on gains made by non-residents for disposal of ALL TYPES of UK property rather just residential property. These new rules also apply to disposals of interests/shares in ‘property rich entities’ i.e. non-resident companies that have 75% or more of company assets in UK property.