Capital gains tax (CGT)

Entrepreneurs’ relief

Qualifying gains will be taxed at 10%. Claims may be made on more than one occasion up to a ‘lifetime’ total of £10m. Annual exempt amount – individuals £11,100 and most trustees £5,550.

CGT: tax treatment of carried interest

Legislation will be introduced to provide that where an individual performs investment management services for a collective investment scheme through an arrangement involving one or more partnerships, any sums received in respect of carried interest under that arrangement will constitute a chargeable gain and be subject to CGT. This will cover the entire sum received by an individual, regardless of the items notionally applied to satisfy the carried interest at the level of the partnership or other entity in the fund structure.

This measure will have effect on all carried interest arising on or after 8 July 2015, whenever the arrangements were entered into.

Inheritance tax (IHT) nil-rate band

The IHT nil-rate band was previously frozen at £325,000 until April 2018. It will now remain frozen until April 2021.

IHT: main residence nil-rate band

The Government will introduce an additional nil-rate band when a residence is passed on death to a direct descendant. This will be £100,000 in 2017/18 and will increase by £25,000 each year until it is £175,000 in 2020/21.

This will affect individuals, with direct descendants, who have an estate (including a main residence) with total assets above the IHT threshold (or nil-rate band) of £325,000.

IHT and non-domiciles

From April 2017, the point at which an individual who is classed as a non-domicile is deemed to be domiciled for IHT purposes will be brought forward to 15 out of 20 years. The Government will also treat individuals who were born in the UK to parents who are domiciled here, as UK domiciled whilst they are in the UK. This aligns IHT with the changes to the income tax and CGT regimes.

IHT on UK residential property of non-domiciles

The Government will legislate to ensure that from April 2017, IHT is payable on all UK residential property owned by non-domiciles including property held indirectly through an offshore structure. This will apply regardless of their residence status for tax purposes and so will also include non-domiciles who are not UK resident. A full consultation will take place later in the year.