Capital taxes
Stamp duty land tax (SDLT)
There will be relief from SDLT on purchases of residential properties that cost up to £250,000, where the transaction is completed on or after 25 March 2010 and before 25 March 2012. This relief can only be claimed by first time buyers who intend to occupy the property as their main home. To help fund this temporary tax relief, an additional rate of SDLT will be introduced at 5% on residential properties costing £1 million or more, where the transaction is completed after 5 April 2011.
Special rules apply to partnerships that ensure SDLT is not charged on transfers of land or property made between the partners or between a partner and the partnership. Anti-avoidance rules will be introduced to ensure that contrived partnerships are not used to avoid SDLT where it would otherwise be due.
Where SDLT is overpaid because of a mistake in a land tax return, the tax can be reclaimed within six years. From 1 April 2011, claims for repayment of overpaid SDLT must be made within four years. It will no longer be necessary for the overpayment to have arisen from a mistake in the land tax return.
Stamp duty land tax (based on consideration)
| Residential |
Commercial |
Rate |
£125,000* or less
|
£150,000 or less
|
Nil |
Over £125,000* up to £250,000
|
Over £150,000 up to £250,000
|
1% |
Over £250,000 up to £500,000
|
Over £250,000 up to £500,000
|
3% |
Over £500,000
|
Over £500,000
|
4% |
| |
|
|
* £150,000 for property in disadvantaged areas. £250,000 for first time buyers where completion is on or after 25/3/10 and before 24/3/12
|
| |
Stamp duty (including SDRT) |
|
| Stocks and marketable securities |
0.5% |
| |
|
| No charge unless the duty exceeds £5 |
|
Capital gains tax
The rate of capital gains tax for 2010/11 remains at 18%. The capital gains tax annual exemption has also been frozen at £10,100, with the exemption for trusts generally set at £5,050.
Entrepreneurs’ relief
Entrepreneurs’ relief reduces the effective rate of capital gains tax to 10% on gains arising on the disposal of businesses and certain business assets. Individuals are restricted to claiming this relief on up to £1 million of lifetime gains made after 5 April 2008. This limit is to be increased to £2 million for disposals made after 5 April 2010. No additional relief is given for gains that exceed £1 million made before 6 April 2010.
SAVER
Postpone selling your business. If you are selling your business, consider delaying the disposal until after 5 April this year when the limit for entrepreneurs’ relief doubles to qualifying gains of £2 million. The tax rate is 10% instead of 18%.
Inheritance tax
The nil rate band for inheritance tax has been frozen at £325,000 until 5 April 2015. The rate of inheritance tax on death remains at 40%.
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