The annual exemption for individuals has been increased to £8,500
for 2005/06 (2004/05: £8,200). Trustees receive half this
figure (£4,250 for 2005/06; £4,100 for 2004/05), although
this may be shared between trusts which have been set up by the
same person.
In spite of some alarmist stories about abolition of the exemption
for a taxpayer's only or main residence, the Budget confirmed
that this will be retained (at least for the time being); and,
in spite of some optimistic suggestions that the complications of
CGT taper relief might be reduced, there were no changes in that
area.
Anti-avoidance measures
The Chancellor tried to close down a number of CGT avoidance schemes,
including:
individuals becoming temporarily non-resident and taking advantage
of double tax agreements with other governments to avoid any
charge to UK CGT on gains realised while abroad;
trusts becoming non-resident and also trying to exploit double
tax agreements;
exploiting the rules on foreign-located assets, on which foreign
domiciled individuals only pay CGT if they bring the proceeds
back to the UK.
Closing CGT loopholes has been notoriously difficult for the
Chancellor, who usually has to return several times to achieve the
desired result. It remains to be seen whether these measures will
close the holes straight away.
