The Budget and Private Clients

4th March 2021

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As many would have seen, the Chancellor, Rishi Sunak, delivered his budget speech yesterday, which included a variety of measures but here, we are only looking at some key points for private individuals. 

There will be no change to the annual exempt amount for Capital Gains Tax until April 2026 and so the exemption remains at £12,300 for individuals and personal representatives, whilst trustees have an exemption of either £12,300 or £6,150 depending on the type of trust.

A similar freeze was announced for Inheritance Tax with the nil rate band, the amount on which no Inheritance Tax is paid, remaining at £325,000 per person whilst the additional or residence nil rate band is £175,000.  Again, these changes apply to April 2026.

Both of these announcements do give some clarity and will enable people and families to plan over the next 5 years. As always, careful consideration should be given to assets in the round and any available reliefs or exemptions when making any decision to sell or give away assets. 

The Inheritance Tax nil rate band has now been at the same level since April 2009. This has had the effect of pulling in an increasing number of estates into the Inheritance Tax net, particularly in London and the South East but undoubtedly throughout other parts of the country too, mainly as a result of rises in house prices. 

Importantly though, further announcements will be made on the 23rd March this year, which has already been dubbed “Tax Day”, when the Government will publish a number of tax related consultations and calls for evidence. 

There is some speculation that this could see initial steps towards more fundamental changes to Inheritance Tax and Capital Gains tax and so we can comment further then on the possible future direction of the Government’s tax strategy. 

Colman Coyle has considerable experience in advising in relation to lifetime tax planning and related issues and if you would like to discuss the points raised here, please contact Patrick Green on +44 (0) 207 354 3000 or patrick.green@colmancoyle.com

Patrick Green

Patrick Green

Senior Associate

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