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Automatic deduction of savings income tax

Open-ended investment companies, authorised unit trusts,

investment trust companies and peer-to-peer loan platforms will

be able to pay interest without deduction of income tax from

April 2017.

CAPITAL TAXES

Capital gains tax

The higher rate of capital gains tax (CGT) will be reduced from

28% to 20% and the lower rate will reduce from 18% to 10%

with effect from 6 April 2016. The 28% and 18% rates will

continue to apply to carried interests and to chargeable gains on

residential property.

Entrepreneurs’ relief

Entrepreneurs’ relief will be available on a disposal of a privately

held qualifying asset when the accompanying disposal of business

assets is to a family member. This provision is backdated to

disposals after 17 March 2015. This mitigates the effect of the

Finance Act 2015 changes which adversely impacted on sales

of a business to members of a claimant’s family under normal

succession arrangements.

Relief will also be available, subject to certain conditions, on gains

on the goodwill of a business when that business is transferred to

a company controlled by five or fewer persons or by its directors.

This will be backdated to disposals after 2 December 2014. In

some cases involving joint ventures and partnerships, it will

be possible to claim relief even though the 5% minimum holding

conditions are not met; this applies to disposals from 18 March

2015.

The 10% rate of CGT will be extended to external investors who

are not employees or officers of the company whose shares they

acquire. The shares must be newly issued for new consideration,

be in a trading company or holding company of a trading group,

be issued after 16 March 2016, be held for at least three years

from 6 April 2016, and be held continually for three years

until disposal. This will be subject to a separate lifetime limit of

£10 million of gains.

BUDGET

16 MARCH 2016

page 8

saver

CGT rates are coming

down on most

investments after 5 April

2016.

Think about the

timing of your disposals

for both gains and losses.

£