The long awaited Emergency Budget of the Coalition Government had some surprises in it, and whilst the press releases from HMRC have yet to be examined in detail, for rural landowners it was good news.

The increase in Capital Gains Tax for only higher rate tax payers means good news for a lot of working farmers .And the continuation of the annual allowance is also good news, and unexpected.  For trustees and personal representatives of deceased persons the rate will also be 28%, so that is an increase, too.

What was a bit shocking, though, was the introduction of the new 28% CGT rate with effect from midnight  on the 22 June: I had thought that any changes to CGT would be phased in, such as was proposed for VAT. Whilst we had all been working overtime to get many deals exchanged or completed by 22 June, we were still surprised at this immediate increase. Equally, though, one can see the wisdom in this, so as to avoid a planned rush up to a future deadline.

But by getting all the deals through that we could before midnight  we  have  saved several clients many thousands of pounds, where they are higher rate tax payers.

A word of warning, though: on first examination, the basic rate tax payer may still be caught if the  gains made by an individual when added to his income means the total takes it in to the higher tax rate band. If anyone has income , and gains above the annual allowance of £10,100, that exceed £43,875 (falling to £42,375 in April 2011)  then they will have to pay 28% CGT on gains made after midnight on 22 June.

Once the dust has settled and the press releases digested, we will update this section further.

Jeanette Dennis
Agricultural Solicitor