Budget 2015 – Capital Gains Tax

The capital gains tax (CGT) annual exempt amount will be £11,100 for 2015-16 for individuals, personal representatives of deceased persons and trustees of certain settlements for the disabled. The annual exempt amount for most other trustees is £5,550.

For capital gains above the annual exempt amount the CGT rate for basic and higher rate tax payers will remain at 18 and 28 per cent respectively.

Entreprenuer’s relief and incorporation

In the Autumn Statement, the Chancellor restricted relief for goodwill on incorporations for transactions after 3 December 2014.

Prior to this, a sole trader could sell the goodwill of his or her business to their own limited company and claim Entrepreneur’s relief and pay tax on the gain over the CGT exempt amount at only 10%.  The company could then claim a tax deduction for the goodwill, and save tax, usually at 20%.

From 3 December 2014, the individual is no longer able to claim Entrepreneur’s relief and the company cannot claim a tax deduction for the goodwill.



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