Budget 2005


Personal Income Tax

Tax Credits

National Insurance Contributions





Capital Gains Tax

Stamp Duty Land Tax

Inheritance Tax

Corporation Tax

Business Tax

Value Added Tax

Other Measures

Tax Tables

National Insurance


Capital Gains Tax

Annual exemption and tax rates

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.

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