The June 2010 Budget brought in a new CGT rate of 28% for higher rate taxpayers, which was not as bad as many people had feared. The increase applied immediately, but there are still some planning opportunities available for 2010/11 in how you allocate your annual CGT exemption (£10,100 for 2010/11) and any capital losses to pre and post 23 June 2010 gains. Generally it will be more beneficial to allocate these to gains later in the year unless other reliefs are available.
If you have sufficient income to already be a higher rate taxpayer for 2010/11, then all gains on disposals post 23 June 2010 will be taxed at 28%, unless you are entitled to Entrepreneurs’ Relief (see later).
If you are a basic rate taxpayer for Income Tax purposes, the unused part of your basic rate band (£37,400) can be allocated to gains on disposals post 23 June 2010 which will reduce the CGT rate to 18%. Any balance will be taxed at the higher rate of 28%.

Whilst the system may have been simplified, this does not lessen the tax planning opportunities to minimise tax payable. Considerations might include losses, reliefs, ownership of the asset and how it is owned. To maximise the opportunity, forward planning is essential.
As with many other taxes, careful planning and detailed practical knowledge of the legislation can minimise the tax payable.
Through pro-active Capital Gains Tax planning we have recently saved a client over £50,000 on the sale of agricultural property.

Please contact us to learn more about making these savings.

December 2010