This checklist summarises the most important private client tax announcements in the June 2010 Budget.
Capital Gains Tax (CGT) rises to 28%
For gains arising on or after 23 June 2010, the rate of CGT will increase to 28% for higher and additional rate taxpayers, trustees and personal representatives. Basic rate taxpayers will continue to be liable at 18%. The new rate will apply equally to any deferred gains that come into charge on or after 23 June 2010. The annual exempt amount will remain at £10,100 for the tax year 2010-11.
IHT nil rate band to remain frozen at £325,000 until 5 April 2015
The inheritance tax (IHT) nil rate band will remain frozen at £325,000 until 5 April 2015.
50% income tax rate to remain in place
The 50% additional income tax rate will remain in place for the time being. The rate took effect on 6 April 2010 and applies to income over £150,000.
Furnished holiday lettings rules will not be withdrawn
The government announced that it will not proceed with the proposal to withdraw the furnished holiday lettings (FHL) rules. The existing rules will continue to apply to holiday lettings situated in the UK or elsewhere in the European Economic Area during the tax year 2010-11.
Requirement to annuitise at age 75 to be deferred to age 77 pending consultation
The existing annuitisation rules, effectively requiring members of registered pension schemes to buy an annuity by age 75 will be abolished from 2011/12. In the meantime, the requirement will be deferred for any members who reach age 75 on or after 22 June 2010, they will not have to buy an annuity until they reach age 77.
Stamp duty land tax (SDLT) rates
A new SDLT rate of 5% for purchases of residential property where the consideration exceeds £1 million, will take effect on 6 April 2011. The previous highest rate was 4% for purchases where the consideration exceeds £500,000. All other SDLT rates and thresholds remain unchanged.
First-time buyer “relief”
In the March 2010 Budget, the former Labour government announced the introduction of SDLT relief for first-time buyers of residential property where the consideration does not exceed £250,000. In the June 2010 Budget, the new government said that it will review first-time buyer relief taking into account its impact on affordability and value for money. The existing nil rate of SDLT on residential purchases not exceeding £125,000 continues to apply as before (which means that it is not limited to first-time buyers).
ISA limits to be linked to inflation from 6 April 2011
Limits on tax-free investment in individual savings accounts (ISAs) will increase in line with the retail prices index (RPI) from 6 April 2011. If the RPI is negative, the limits will remain unchanged.