BUDGET REPORT 9 MARCH 1999

CAPITAL TAXES

CAPITAL GAINS TAX (CGT)

The annual exemption for 1999/2000 has been increased to £7,100 for individuals and to £3,550 for most trusts.

RATE OF TAX

For gains realized on or after 6 April 1999 capital gains tax rates will be aligned with those for savings income so that gains are charged at 20% where the gains when added to total income are below the basic rate limit and 40% to the extent that they exceed that limit.

ABUSE OF CONCESSIONS

Some gains may be deferred or rolled over only by concession. At present there is no statutory protection against taxpayers who abuse the terms of those concessions by not returning the deferred gain.

To avoid such abuse legislation will be introduced so that the person on whom the deferred gain subsequently falls will be liable to a capital gains charge if that person fails to return the liability arising as a consequence of such a concession.

LLOYD'S

Syndicate capacities held through a Members' Agent Pooling Arrangement (MAPA) will be treated as a single holding from 6 April 1999.

Also from that date all syndicate capacity whether held through a MAPA or directly will be eligible for roll over relief.

INHERITANCE TAX (IHT)

The nil rate band has been increased by £8,000, to £231,000 with effect from 6 April

1999. The rates of tax remain unchanged.

There were no changes to the rates of business or agricultural property relief.

Potentially exempt transfers and deeds of variation were also unaffected.