Budget 2004
Introduction
Personal
Income Tax
Tax Credits
National Insurance Contributions
Employees
Pensioners
Savings
Trusts
Capital Gains Tax
Inheritance
Tax
Stamp Duty / Stamp Duty Land
Tax
Corporation Tax
Business Tax
Value Added Tax
Other Measures
Tax
Tables
National Insurance
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Capital
Gains Tax
Annual exemption and tax rates
The annual exemption for individuals has been increased to £8,200
for 2004/05 (2003/04: £7,900). Trustees receive half this
figure (£4,100 for 2004/05; £3,950 for 2003/04),
although this may be shared between trusts which have been set
up by the same person.
Anti-avoidance measures
The Chancellor has closed down two tax avoidance schemes which
took advantage of reliefs which might be available to a trust,
but would not be available to the settlor of the trust. The
schemes involved transferring an asset into trust and claiming
gifts relief to pass the chargeable gain to the trustees; then
selling the asset in the trust with the benefit of the trustees'
extra relief, so the gain passed in by the settlor would not
be taxable.
From 10 December 2003:
- Where a settlor could ever benefit from the trust in the
future, gifts relief can no longer be claimed on transferring
an asset to the trust, so the gain up to that point will
be charged on the settlor.
- Where the asset is a house, and the first rule does not
apply, the settlor will have a choice - either gifts relief
can defer the charge when the house is transferred into
the trust, or the trustees will be able to claim the only
or main residence exemption for a beneficiary living in
the house, but not both.
Where gifts relief was claimed in the past on a transfer of
a house into a trust, the main residence exemption stops running
from 10 December 2003 - so the second rule will apply in part
to existing arrangements, and may make some gains chargeable
where such a trust has been established in the past.
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