The latest budget was announced by the Chancellor on the 29th of October this year.
Now that the dust has settled a little there are some announcements which did not make the headlines which we think are still worthwhile noting.
Inheritance tax
The rules relating to inheritance tax are broadly unchanged aside from some minor technical amendments. While unusual, this does give individuals and their families some welcome breathing space when it comes to managing their affairs and planning their succession.
Reliefs such as Agricultural Property Relief (APR) and, Business Property Relief (BPR) continue to be available. The Office for Tax Simplification (OTS) is currently reviewing the feedback it received following the announcement in April of this year regarding a review of the current Inheritance Tax (IHT) regime.
For some time now commentators and experts have considered that APR may be under threat in some way which could have a significant impact on farming families, land owners and family succession. In addition, many individuals, entrepreneurs and family businesses rely heavily on the availability of BPR in relation to asset structuring and investments. Changes or alterations to either of those two reliefs will mean many people will need to review their affairs.
While the reliefs are available there may be ways in which individuals can 'bank' their reliefs.. We would encourage all those contemplating personal, family and business succession to review their affairs at this time in order to mitigate the impact of IHT.
Stamp Duty Land Tax surcharge for foreign investors
At the Conservative Party conference, the Prime Minister announced that the Government were contemplating imposing a 3% surcharge on foreign buyers of UK property. In the period 2014-2016 an estimated 13% of new London homes were purchased by overseas purchasers.
In the budget, the Chancellor announced that a consultation would take place in January 2019 regarding the imposition of a 1% surcharge on foreign buyers of UK property. It should be remembered that many foreign buyers are already paying the additional SDLT surcharge of 3% on second homes in any event so the additional take for the revenue may be limited. It is our intention to publish our response to the proposals in the New Year once the consultation is underway.
Capital Gains Tax
Traditionally, if a UK resident sells a residential property then any gain on such sale is declared together with any other gains and losses in their end of year tax return. In the budget it was confirmed that from 6 April 2020 UK residents will have to make a payment on account of Capital Gains Tax (CGT) and file a CGT return within 30 days of completion. Even if earlier losses have been realised in that tax year it will not be possible to offset losses against gains until the final end of year tax return has been filed. In some cases this will bring forward filing and payment obligations by up to 21 months.
It will be essential for individuals to be aware of their new responsibilities as it will be easy for people to overlook these tight deadlines and fall foul of the Revenue.
Furthermore, from the same period, the government are reducing the final period of deemed occupation for Private residence relief from 18 months to 9 months. This could have a significant impact on couples who are divorcing where a property may be subject to litigation or simply on those struggling to sell a property through no fault of their own.
No changes are being made to the current final period of exemption of 36 months which applies to disabled persons or those in care.
Summary
Personal taxes where left largely untouched by the Government which gives increased scope for estate planning in this current uncertain climate.
Trowers & Hamlins are well placed to act with you and other professional advisors in respect of all assets of estate and succession planning.
This article is taken from Private Wealth newsletter - December 2018
