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This note covers two quite separate CGT points.

The first point is in relation to use of losses and annual exemption. Since it is now possible for individuals to be liable to CGT at up to three different rates within a single year (10% where entrepreneur’s relief is available, 18% to the extent that all or part of the basic rate band is available and 28% otherwise) this raises the question of the order in which annual exemptions and losses (either brought forward or current-year) are set off. Helpfully, the legislation allows you to use these in the most beneficial way – normally by setting primarily against gains charged at the higher rates.

The second point arises from the mid-year introduction of the 28% rate. The basic rule is that gains are protected from the new higher rate only if made before 23 June; so people who were banking on rates going up only at the start of a new tax year will have generally missed the boat. However, there are three situations in which the 28% rate does not apply until 6 April 2011.

The first case is where a person domiciled outside the UK and taxed on the remittance basis remits the proceeds of an offshore gain before 6 April 2011. This continues to be taxed at a maximum rate of 18% (even, surprisingly, if the gain itself is made after 22 June). The second case is where gains of an offshore trust are attributed to a UK-domiciled settlor (under S86 TCGA 1992); again, the new rate does not apply to these gains for the rest of the current tax year, even if the gains are made after 22 June. And the third is where a “short-term non-resident” resumes UK residence in the tax year 2010/11 and thereupon becomes chargeable on gains which have arisen in his period of non-residence. UK residence is effectively treated as resumed and gains as arising on 6 April 2010 regardless of the date on which residence is in fact resumed.

In each case, therefore, there may be merit (in particular circumstances) in taking action within the next eight months to avoid a future charge at the 28% rate. As always, further advice is available from tax@bkltax.co.uk.