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The Autumn Statement And Your Lifetime Planning Arrangements
- AuthorBeverley Bowen
Yesterday saw George Osborne release his 2013 Autumn Statement. In the Statement Mr Osborne reminded everyone that this Government is clamping down on tax evasion, avoidance and aggressive tax planning.
There was no announcement regarding any changes to the current nil rate band threshold for inheritance tax, which was not unexpected. The threshold therefore remains at £325,000 per person.
One surprise announcement however was that the Capital Gains Tax (CGT) Principal Private Residence Relief final period relief is to be reduced in half. It is likely however that this reduction in the final period will not take effect until the 2015/2016 tax year.
Principal Private Residence Relief (PPR) is a useful relief when selling your home as it reduces the amount of CGT payable if the property is sold at a gain, usually to zero. At present, the rules are that the last 36 months of ownership are usually deemed to be part of the exempt period for PPR even if the owner has not lived at the property during that time period. The rules will now mean that this time period is reduced to 18 months.
Another change regarding the CGT rules will affect those who are not resident in the UK. At present, if a non-UK resident sells residential property in the UK then they do not have to pay CGT on any gains. The Government felt that it was not fair that UK residents had to pay tax in such circumstances, whereas a non-UK resident did not. From April 2015 however non-UK residents will now have to pay CGT when they sell residential property in the UK at a gain. I understand that there will be a public consultation on this however before April 2015.
If you are selling residential property that you are not living in, or if there is something out of the ordinary with the residential property such as it forms part of a business or is a farm then specialist advice should be sought. This advice should cover both the effect for your inheritance tax position going forward but also whether there will be any CGT to pay on disposal.
A member of the Lifetime Planning team, Beverley has recently been admitted as a full member of STEP (Society for Trust and Estate Practioners). STEP is a leading worldwide professional body for practioners in the fields of trusts, estates and related issues. STEP members provide expert advice on how to comply with the often complex law and tax rules surrounding trusts, estates and inheritance and are the most experienced practioners in those fields.