A. Introductory Note
- capital gains tax;
- the compilation of the statistics;
- the content of the tables.
- in 1982 an indexation allowance was introduced. This allowance is the difference between the cost incurred and the same costs indexed by the Retail Prices Index. Initially, indexation was only given from either twelve months after the date of any expenditure or March 1982 whichever was the later. And to begin with, indexation could not create or add to a capital loss - it could only reduce capital gains;
- in 1985, changes removed the restrictions on indexation and allowed it to add to or create a loss. The 12 month rule was also abolished so that, for expenditure after March 1982, indexation ran from the date that expenditure was incurred. From 1985, it was also possible for the indexation allowance to be based on the market value of any earlier costs;
- in 1988, further changes to indexation were made. These involved full rebasing by reference to market value at 31 March 1982 to ensure that gains accruing before 1982 were not charged to tax. In that year, the rate of capital gains tax was aligned with the rates for income tax. Capital gains were thereafter, in broad terms and after deducting any allowances and reliefs available, taxed as if they were the top slice of an individual's income;
- since November 1993, it has no longer been possible to use indexation to create or increase a capital loss. Indexation can only be used to reduce or extinguish a chargeable gain. But transitional relief allowed individuals and trustees to use up to £10,000 of indexation relief on losses realised and used in the period 30 November 1993 to 5 April 1995;
- in 1998 indexation was withdrawn for periods after April 1998. Instead chargeable gains are now tapered according to the length of time that the asset has been held after 5 April 1998. The taper is more generous for business assets than for non-business assets; the definition of the former and both taper rates are shown in table TA.7. Assets acquired before 17 March 1998 qualified for an addition of 1 "bonus" year to the period for which they are treated as held after 5 April 1998. The taper is applied to net gains that are chargeable after the deduction of any in year losses, or any losses carried forward from earlier tax years. The allocation of losses to gains is on the basis that produces the lowest tax charge. Also, the rate applicable to trusts was extended to include interest in possession trusts and personal representatives, previously chargeable at basic rate;
- in 1999, capital gains tax rates were partially aligned with the income tax rates on savings income, giving rates of 20 per cent and 40 per cent for individuals;
- in 2000, business asset taper rates were modified so that the taper matures after 4 years instead of 10 and the definition of business assets was made wider. Business assets acquired before 17 March 1998 no longer qualify for the bonus year in calculating the appropriate taper relief fraction to apply to gains. Also capital gains tax rates were fully aligned with the income tax rates on savings income to include the starting rate of 10 per cent;
- in 2001, the definition of business assets was further extended, with effect from April 2000, to employees disposing of shares in non-trading companies where they work so long as they do not have a material interest of more than 10% in the company. Also assets other than shares disposed of by trustees of a settlement that have been used for a trade by a partnership of which the trustees are a member will be eligible for business asset taper relief; and
- - in 2002, the business asset taper rates were modified so that the taper matures after 2 years rather than 4. Also, there were a number of simplification measures - further details of the changes can be found at www.inlandrevenue.gov.uk/cgt/cgtchanges.htm.
The rates of capital gains tax since 1977-78 are given in the table Table TA7, which also shows the amounts of the annual exemption available for each year from 1980-81 and rates of taper relief.
C. Capital Gains Tax Statistics
Individuals and Trustees
D. Non - life companies
E. Enquiries and Further Information