Capital taxes

The June 2010 budget announed the following: (these measures apply to individuals, trustees and personal representitives of deceased perons.

-  The annual exempt amount for 2010-11 remains at £10,100. The Chancellor stated in his Budget Day speech that the limit will be subject to indexation in future years.

-  A new rate of capital gains tax of 28 per cent will be introduced with effect from 23 June 2010. For individuals the capital gains tax rate will remain at 18 per cent where total taxable gains and income are less than the upper limit of the income tax basic rate band. The 28 per cent rate will apply to any excess.

-  Capital gains arising between 6 April 2010 and 22 June 2010 will continue to be taxed at 18 per cent.

-  For trustees and the personal representatives of deceased persons, the rate of capital gains tax increases from 18 per cent to 28 per cent with effect from 23 June 2010.

-  The rate of capital gains tax for gains qualifying for entrepreneurs' relief remains at 10per cent. The lifetime limit on gains qualifying for entrepreneurs' relief is increased from £2 million to £5 million with effect from 23 June 2010.

-  If an entrepreneur sold a qualifying business for a gain of between £2 million and £5 million between 6 April 2010 and 22 June 2010, he cannot take advantage of the increase in the lifetime limit post the date of sale to mitigate his capital gains tax liability on the initial gain.

-  It is possible for an entrepreneur to make a qualifying gain of £2 million before 23 June 2010 and a further qualifying gain of £3 million after 22 June 2010 in order to take advantage of the increase in the lifetime limit.

-  Investors may have deferred a capital gain in previous years by reinvesting in shares under the enterprise investment scheme. This gain could be deferred until the replacement shares were themselves sold. If the replacement shares are sold after 22 June 2010, the deferred capital gain will be liable to capital gains tax at either 18 per cent or 28 per cent, dependent upon the quantum of the gain.