Capital Gains Tax

	2002/03	2001/02
Taxed as top slice of income	(savings rate)	(savings rate)
Annual exemption
- individual	£7,700	£7,500
- settlement	£3,850	£3,750
Chattels exemption
(proceeds per item or set)	£6,000	£6,000
Retirement relief
- exempt, first	£50,000	£100,000
- 50% exempt, next	£150,000	£300,000

Taper Relief
For gains realised after 5 April 1998 by individuals or trustees, indexation allowance is frozen and the gain reduced by a tapering relief. The value of the taper relief depends on whether or not the asset is a business asset, and on the complete number of years the asset has been held after 5 April 1998 (with an additional "bonus" year for assets held on 16 March 1998).

No. of complete years after 5 April 1998	Business assets % of gain chargeable	Other assets % gain chargeable
0	100	100
1	92.5	100
2	85	100
3	77.5	95
4	70	90
5	62.5	85
6	55	80
7	47.5	75
8	40	70
9	32.5	65
10 or more	25	60

For taper relief on the disposal of business assets only after 5 April 2000 the "bonus" year was withdrawn, but the rate of taper relief was accelerated:

No. of complete years after 5 April 1998	Business assets % of gain chargeable
0	100
1	87.5
2	75
3	50
4	25

2003 and Beyond

The thresholds for retirement relief are being reduced. The exemption and half exemption limits have been reduced annually as taper relief becomes more valuable. The maximum retirement relief for each year in the final years is:

	100% relief on gains up to £	50% exempt on next £
2001/02	£100,000	£300,000
2002/03	£50,000	£150,000
2003/04	Retirement relief withdrawn

Notes

1. Transfers between husband and wife living together are exempt.



2. Capital gains are regarded as the top slice of savings income. Rates of 10%, 20% and 40% will therefore apply to gains taxed on individuals, as appropriate. Gains taxed on trustees are usually taxed at the special trust rate of 34%.

Did you know?

That approximately half of all individuals who pay capital gains tax have some liability at the rate of 20%.