Budget issues

July 2010

Capital Gains Tax

The following changes affect chargeable gains on or after 23 June 2010.

1. If your income, less all allowable deductions and reliefs, plus your net chargeable gains are less than the upper limit of the basic rate income tax band, £37,400 for 2010-11, Capital Gains will still be subject to a flat rate of 18%. If higher, a flat rate of 28% will apply to gains, or the part of the gains that cause you to be a higher rate tax payer.
2. If you dispose of qualifying assets on or after 23 June 2010 two aspects of CGT Entrepreneurs' Relief have changed:

There is a technical change to the way in which the relief is calculated, although effectively a flat rate of 10% will continue to apply, and
The lifetime gains that can benefit from the relief are increased from £2m to £5m.

Furnished Holiday Lettings

It would appear that the threatened withdrawal of the tax benefits for owners of Furnished Holiday Lettings has been cancelled!

For the tax year 2010-11 it is back to business as usual - letting activity is treated as a trade, CGT rollover and Entrepreneurs' Relief is available, rental losses can be set off against other income and so on.

However, later this Summer the Government will be publishing a public consultation with a view to changing the tax treatment of Furnished Holiday Let property from 6 April 2011. Changes may include:

An increase in the number of days qualifying properties have to be made available for letting and actually let. A change in the way loss relief is given.

We will advise when as and when the results of the consultation are published.