News: January 2014

CGT

Annual Capital Gains Tax (CGT) exemption

This is confirmed as £11,000 in 2014/15, so is worth a useful £3,080 at the 28% rate

Employee ownership

Following consultation there will be new tax reliefs to encourage and promote indirect employee ownership. This will represent a possible alternative exit route from your business, with full CGT exemption where you pass a controlling interest to your staff via an employee ownership trust from April 2014.

In addition, from October 2014 bonus payments made to employees of indirectly employee owned companies which are controlled by an employee ownership trust will be exempt from income tax up to £3,600 per annum.

CGT private residence relief

A gain arising on a property which has been your private residence throughout your period of ownership is exempt from CGT. There are deemed period of occupation rules which may help to provide an exemption from CGT even if you were not living in the property at the time. This can with care result in obtaining the valuable relief on a 2nd home (as reportedly achieved by several of our MP’s!).

In particular, your last 36 months of ownership is treated as a period of occupation as a residence, but from 6 April 2014 this reduces to 18 months. Clearly timing is of the essence here.

CGT on non-residents disposing of UK residential property

If you let out a UK residence you are naturally liable to UK income tax on the net profit. That is the case even if you are not tax resident in the UK, but that does not mean you have to pay any CGT on the gain on sale if you live abroad. Well, not at the moment anyway, as from 6 April 2015 a CGT charge will be introduced on future gains made by non-residents disposing of UK residential property. A consultation on how best to introduce this will be published in early 2014. Again, the timing of any sale will be all important.

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