This is increased from £7,500 in 2001/2002 to £7,700 in 2002/2003 for individuals and personal representatives, and (in most cases) from £3,750 to £3,850 for trustees.
RATES OF TAX
No change has been proposed regarding the rates of capital gains tax which are, of course, largely as for income tax. In brief terms, these will be subject to tax as if they were the top slice of income and be taxable at 10%, 20% (basic rate tax band) or 40% as appropriate.
For example, as a result of a long period of effective tax and financial planning John has taxable income (ie. after personal allowances and deductions) of £1,440. He then realises £37,800 of capital gains (after the annual CGT exemption).
John's capital gains will be subject to tax as follows:-
£480 @ 10% (up to £1,920)
£27,980 @ 20% (up to £29,900)
£9,340 @ 40% (over £29,900)
Whilst particularly welcome in respect of income tax, it will be comparatively rare for an individual to have an intact (or partially intact) £1,920 10% tax band to set against capital gains in excess of the annual exemption.
CONTINUED PHASING OUT OF RETIREMENT RELIEF
No changes have been proposed here but we thought that, nevertheless, it is worth stating the current position regarding retirement relief which, following the introduction of taper relief in 1998, is being gradually phased out. The relief ends completely on 5 April 2003.