20 March 1998

Expected CGT changes made

Chancellor Gordon Brown delivered a curates egg

budget – at least as far as farming is concerned. There

was significant help for small businesses, and for less

well off families. But fuel costs and stamp duty

increases were the main negatives

AS promised, the chancellor announced several fundamental changes to CGT.

Indexation will continue until Apr 1998 (running at 100% for assets held since Mar 1982) and will then be frozen.

It will be replaced by a taper, reducing the amount of the gain the longer an asset has been held. If held for 10 years or more, the effective tax rate will be 10%.

Retirement relief will be phased out over five years from Apr 6, 1999, and will be replaced by the taper relief.

Annual exemption is increased fto £6800 in line with inflation.

Bed and breakfasting of shares (selling shares and buying them back shortly afterwards to use annual exemption) is no longer available with immediate effect.

Reinvestment relief is to be incorporated into a new enterprise investment scheme, but farming, forestry and market gardening are now specifically excluded activities. Changes take effect from Apr 6, 1998.

Rollover relief is still available. Contrary to expectations, no extra development land tax was levied.