From this month, the tax charged on the profit you make when you sell an asset will be reduced considerably.
Capital gains tax (CGT) will be cut from 18 per cent to 10 per cent for basic rate taxpayers, and from 28 per cent to 20 per cent for 40p and 45p rate taxpayers.
Because you have an £11,100 annual allowance, few Britons actually pay CGT, but the number who do has been growing fast. The Treasury now nets around 50 per cent more from CGT than from inheritance tax, and the changes are estimated to cost it £600m a year from 2017-18.
The reductions will be a big boon for investors who hold significant investments outside their Isa or pension. And even then, you are able to earn £11,100 a year in capital gains before you are liable for taxation.
Private cars, small cash gifts and antiques under £6,000 are exempt.
However, the old rates (18 and 28 per cent) will continue to apply to gains on the sale of a residential property that is not your main home, so second home owners and buy to let landlords won’t benefit.
Instead the Chancellor has maintained the existing rates, equivalent to an 8 per cent surcharge. So those with second homes and buy-to-let investors will pay more.
The Budget document said the move was designed to “ensure that CGT provides an incentive to invest in companies over property”.
The rules will mean a £50,000 gain (above the allowance) made from selling a second home or buy-to-let property will leave a basic rate taxpayer with £41,000 or a higher rate taxpayer with £36,000.
But selling other assets like shares that make a £50,000 gain (above the tax-free allowance) would see basic rate taxpayers get to keep £45,000, while higher rate taxpayers would be left with £40,000 after CGT.