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Capital taxes

Capital gains tax, inheritance tax and property taxes.

Capital gains tax

The government has announced that the capital gains tax annual exempt amount will be reduced from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.

Comment

Combined with the changes to the Dividend Allowance, these measures will raise over £1.2 billion a year from April 2025.

Inheritance tax

The inheritance tax nil-rate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further two years until April 2028. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000 and the residence nil-rate band taper will continue to start at £2 million.

Stamp Duty Land Tax

A number of changes were made to the Stamp Duty Land Tax (SDLT) regime earlier this year and these remain. Generally, the changes increase the amount that a purchaser can pay for residential property before they become liable for SDLT.

The residential nil rate tax threshold increased from £125,000 to £250,000.

The nil rate threshold for First Time Buyers' Relief increased from £300,000 to £425,000 and the maximum amount that an individual can pay while remaining eligible for First Time Buyers' Relief increased to £625,000.

The changes apply to transactions with effective dates on and after 23 September 2022 in England and Northern Ireland. These changes do not apply to Scotland or Wales which operate their own land transactions taxes.

There are no changes in relation to purchases of non-residential property.

Residential property

Consideration (£) Rate (%)
0 - 250,000 0
250,001 - 925,000 5
925,001 - 1,500,000 10
1,500,001 and above 12

Non-residential property

Consideration (£) Rate (%)
0 - 150,000 0
150,001 - 250,000 2
Over 250,000 5

Higher rates may be payable where further residential properties are acquired.  

Comment

However, the government has now confirmed that these changes will be a temporary SDLT reduction. The SDLT cut will remain in place until 31 March 2025 to support the housing market.

Land Transaction Tax

The Welsh government also altered its rates in relation to land and buildings in Wales for transactions with an effective date on or after 10 October 2022.

Residential property

Consideration (£) Rate (%)
0 - 225,000 0
225,001 - 400,000 6
400,001 - 750,000 7.5
750,001 - 1,500,000 10
1,500,000 and above 12

Non-residential property

Consideration (£) Rate (%)
0 - 225,000 0
225,001 - 250,000 1
250,001 - 1,000,000 5
Over 1,000,000 6

Higher rates may be payable where further residential properties are acquired.

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