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UK Autumn Budget 2018: Income and Capital Gains Tax

Private Clients - 29 Oct 2018

Income Tax

Philip Hammond announced that the personal allowance will be increased to £12,500 and the basic rate extended to £50,000 from April 2019, one year earlier than previously planned.

Capital Gains Tax

The current capital gains tax annual exemption is being increased from £11,700 to £12,000 from April 2019.  This increase is in line with the rises in the Consumer Price Index, as announced in the Autumn Budget 2018.

Private Residence Relief

To combat a supposed abuse and to better target the relief at owner occupiers, there will be a slight tightening of the private residence relief rules from April 2020.  The private residence relief rules exempt all or part of a gain arising on a property that has been the owner’s main residence.  Currently if you vacate your main residence within 18 months of selling it, that final period of ownership still qualifies for the full exemption.  That final period exemption will be shortened to 9 months.

There is currently an extension to the private residence relief rules, known as lettings relief, available when a property has been an owner’s main residence at some point, but also let for a period when they’ve been absent from the property.  From April 2020 lettings relief will only be available when the owner is in shared occupancy with the tenant.  When an owner shares a property with one tenant or lodger full private residence relief is available anyway, so the revised lettings relief will only apply to those sharing their home with two or more others.

Entrepreneurs’ Relief

Where this relief applies on selling all or part of your business or shares or securities in your personal company the capital gains tax rate is reduced to 10% on the gain.  The conditions are complex and disposals have always had to be carefully managed to ensure relief is not lost.  From April 2019 the minimum ownership period throughout which all other conditions have to be met is being extended from 12 to 24 months.

 

Read the full report
In a Budget to signal the coming of the end of austerity Philip Hammond announced measures to increase public spending in particular to provide a boost to the NHS, Highway’s Agency and Counter Terrorism policing. 

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