Budget 2016 – Capital Gains Tax

Capital Gains Tax (CGT)

Cuts to Capital Gains tax rates from 6 April 2016 but residential property still taxed at current rates

From 6 April 2016, the rates of capital gains tax suffered by individuals on disposals (other than residential property) are being cut as follows:

Gains falling within the basic rate band – cut from 18% to 10%

Gains falling into the higher rate band – cut from 28% to 20%

Gains made on the disposal of residential property which does not qualify for private residence relief will still be subject to tax at the existing rates (of 18%/28%).

CGT rate reduction for long-term investors

Entrepreneurs’ relief will be extended to external* long term investors in unlisted companies. This will provide a 10% rate of CGT for gains on newly issued shares in unlisted companies purchased on or after 17 March 2016, provided they are held for a minimum of three years from 6 April 2016. There is a separate lifetime limit of £10 million regarding such gains.

*not employees or officers of the company