10
Autumn Budget 2017
Capital taxes Inheritance tax
Inheritance tax is currently charged at 40% on the proportion of an individual’s estate exceeding the ‘nil-rate band’ of £325,000. Married couples and registered civil partners can already pass any unused nil-rate band to one another on death.
A new residence nil-rate band (RNRB) now applies in addition to the nil-rate band, allowing a ‘family home’ to be passed wholly or partially tax-free on death to direct descendants such as a child or grandchild. A step-child, adopted child or fostered child is also regarded as a direct descendant.
The RNRB rates are set as follows:
£100,000
2017/18
£125,000
2018/19
£150,000
2019/20
£175,000
2020/21
The RNRB can only be used in respect of one residential property. The property does not have to be the main family home, although it must, at some point, have been a residence of the deceased.
There is a tapered withdrawal of the RNRB for estates valued at more than £2m, at a withdrawal rate of £1 for every £2 over this threshold. Capital gains tax (CGT)
CGT is payable on the profit made when you sell or otherwise dispose of an asset. The rates for 2018/19 are:
On chargeable gains
2018/19
Total taxable income and gains Up to higher rate threshold
10%
From higher rate threshold
20%
Trust rate
20%
Higher rates (18%/28%) may apply to the disposal of certain residential property and carried interest.
Annual exempt amount for 2018/19 – individuals £11,700 and most trustees £5,850.
CGT payment window
The introduction of the 30-day payment window for gains on residential property disposals will be deferred until April 2020.
Taxation of carried interest The government will amend legislation to ensure that asset managers receiving carried interest pay CGT on their full economic gain. The changes will remove the special treatment afforded to carried interest that arises in connection with disposals of assets before certain dates in 2015. The changes will have effect on and after 22 November 2017.
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