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Capital Taxes

Capital gains tax (CGT)

The annual exempt amount for individuals for 2012/13 is £10,600.

Gains that fall within an individual’s otherwise unused basic rate income tax band are taxed at 18%; any remaining gains above the basic rate band limit are taxed at 28%. The rate of CGT for trustees or personal representatives is 28%.

Foreign currency bank accounts

From 6 April 2012, currency gains and losses on the withdrawal of funds from foreign-denominated bank accounts for all individuals, personal representatives and trustees will be exempt from CGT.

Inheritance tax (IHT)

The IHT threshold is frozen at £325,000 until 5 April 2015.

The rate of IHT remains 20% for lifetime transfers and 40% for death estates (including transfers within seven years before death brought back into the estate for the purpose of calculating the tax due at death).

A reduced rate of 36% will apply from April 2012 to death estates, where 10% or more of the net estate is left to charity.

Avoidance using offshore trusts

With effect on and after 21 March 2012, if a person enters into arrangements through which they acquire an interest in excluded property such that the value of their estate is reduced, the reduction will be charged to IHT as if that person had transferred assets of that value directly to a relevant property trust. The assets settled in the offshore trust will cease to be treated as excluded property and will instead become subject to the relevant property regime.

These provisions will also apply to existing schemes or arrangements entered into before 21 March 2012 but only in relation to periodic charges and exit charges that arise on or after that date.