Inheritance Tax and Capital Gains Tax changes announced
The Chancellor’s autumn statement heralds significant changes. Although they will not become law until July 2008, they are retrospective to 9th October 2007 and so planning now is essential.
Inheritance tax
The Nil Rate Band has been doubled for those survivors of married couples/civil partners, who receive all of the estate of the first to die. The Nil Rate Band applicable will be the one applicable on the second death. So, one has to hope that the Chancellor increases the allowance in line with house inflation!
In the light of this, those who set up Nil Rate Band Will Trusts should review them. The Nil Rate Band Trust in Wills is still useful in the following situations.
For those who will benefit from the new regime, we have designed a simple inexpensive codicil to remove the Trust sections from existing Nil Rate Band Trust Wills and revert them to a normal Wills.
Capital Gains Tax
The new proposed legislation removes Taper Relief and Indexation Relief and imposes a fixed rate of 18% on the gain after annual exemptions. For some, losing Indexation and Taper Relief will make a substantial adverse difference to the tax they might need to pay. For others who would have to pay a rate higher than 18%, the tax payable will be substantially reduced.
If you are anticipating a sale soon, timing will be crucial. Some will want to advance it to a date before 5/4/2008 while others will want to delay the sale until after that date. Please note that the effective date for Capital Gains Tax is the date of the contract, not the completion date.
If you think you may be affected by these important changes, please contact Roger Boreham for advice.
Inheritance tax
The Nil Rate Band has been doubled for those survivors of married couples/civil partners, who receive all of the estate of the first to die. The Nil Rate Band applicable will be the one applicable on the second death. So, one has to hope that the Chancellor increases the allowance in line with house inflation!
In the light of this, those who set up Nil Rate Band Will Trusts should review them. The Nil Rate Band Trust in Wills is still useful in the following situations.
- Where there are different families of the spouses/partners to cater for;
- Where there are good reasons to trust assets to Trustees rather than Beneficiaries for a time;
- If you distrust the Chancellor and want to take the Nil Rate Band of the first to die, in case the allowance is removed later;
- Where it fits in with other tax planning.
For those who will benefit from the new regime, we have designed a simple inexpensive codicil to remove the Trust sections from existing Nil Rate Band Trust Wills and revert them to a normal Wills.
Capital Gains Tax
The new proposed legislation removes Taper Relief and Indexation Relief and imposes a fixed rate of 18% on the gain after annual exemptions. For some, losing Indexation and Taper Relief will make a substantial adverse difference to the tax they might need to pay. For others who would have to pay a rate higher than 18%, the tax payable will be substantially reduced.
If you are anticipating a sale soon, timing will be crucial. Some will want to advance it to a date before 5/4/2008 while others will want to delay the sale until after that date. Please note that the effective date for Capital Gains Tax is the date of the contract, not the completion date.
If you think you may be affected by these important changes, please contact Roger Boreham for advice.
<<< Return to News Items : Posted: October 29th, 2007