As anticipated changes to capital gains tax were announced in the Emergency Budget on 22 June 2010.
In relation to gains realised on or after 23 June 2010, two rates of capital gains tax apply -- a standard rate of 18% and a higher rate of 28%.
Individuals will pay capital gains tax at 28% if their total taxable income and post 22 June 2010 gains exceed the basic rate limit for income tax purposes of £37,400. Gains realised on or after 23 June 2010 will be taxed at 28% to the extent that this limit is exceeded. Post 22 June 2010 gains below this limit are charged to capital gains tax at 18%.
Gains realised before 23 June 2010 are taxed at 18%, regardless of the level of the taxpayer's income.
No account is taken of pre-23 June gains in determining whether the basic rate limit is exceeded and the higher rate in point in respect of post 22 June gains.
The annual exemption remains at £10,100 for 2010/11. Individuals can allocate the exemption and any losses to achieve the best overall result. Where a liability to 28% arises in respect of post 22 June gains, the annual exemption and any losses should be set against these gains first to minimise the amount of capital gains tax payable.
Trustees and personal representatives will pay capital gains tax at 18% on gains realised before 23 June 2010 and at 28% on gains realised on or after that date.
Further details of the measure, which is subject to Parliamentary approval, can be found in Budget Note 20.