Important changes have been announced in the Pre Budget Report, proposed to take affect from April 2008

• Important changes have been announced in the Pre Budget Report, proposed to take affect from April 2008
• A new flat rate of Capital Gains Tax of 18%
• Indexation Allowance to be abolished, taking away significant benefits for farmland and other assets held between 1982 and 1998
• Taper Relief abolished

Land and Property owners, particularly those in the process of making disposals, or looking to do so in the near future should carefully consider their position, which may be different after 6th April 2008. Under the current regime, disposals involving long-held agricultural land benefits from indexation (which more than doubled the base value) and Taper Relief, leaving an effective tax payable of 10% of the gain for business assets.

Under the proposed scheme, there will be no Indexation or Taper Relief and 18% tax will simply be due on the difference between the 1982 value and the value at disposal. Using an example of land held since 1982 and sold at £4000 per acre, this would increase tax by almost 5 times to over £450 per acre. The impact is not solely confined to those planning a sale, there will be changes for owners transferring property within the family or simply planning future inheritance Those land and property owners who may be considering disposals will need to take early and careful advice to establish whether they are better or worse off under the new system. Changes may still be made to the proposals before the April 2008 introduction, which may include a change of base date.

For further information, please contact Matthew Peters, Gareth Lay or Roger Bush on 01452 880000.