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Taper relief is available for disposal made after 5/4/98. It replaces indexation allowance.
There are two rates of taper relief for businesses assets and non-business assets.
|
Number of whole years held |
Business assets sold in 1999 or 2000 |
Business assets sold in 2001* |
Business assets |
Non-Business Assets |
|
0 |
100% |
100% |
100% |
100% |
|
1 |
92.5% |
87.5% |
50% |
100% |
|
2 |
85% |
75% |
25% |
100% |
|
3 |
- |
50% |
- |
95% |
|
4 |
- |
25% |
- |
90% |
|
5 |
- |
- |
- |
85% |
|
6 |
- |
- |
- |
80% |
|
7 |
- |
- |
- |
75% |
|
8 |
- |
- |
- |
70% |
|
9 |
- |
- |
- |
65% |
|
10 or more |
- |
- |
- |
60% |
There are rates for up to a maximum of 10 years. These won't apply yet because the taper rate is applied for the number of complete years that the asset is held after 5/4/98. Therefore and asset disposed of on 6/4/99 qualifies for 1 year, on 6/4/00 for 2 years etc.
If the asset is actually held prior to 17/3/98 a bonus year is added to determine the taper rate, but this bonus year does not apply to business use assets sold on or after 6/4/2000*. For example an asset acquired on 1/1/98 and sold on 6/4/99 qualifies for the 2 year taper rate.
The percentage shown in the table is the amount of the gain that is taxable. In other words where the 92.5% rate is shown there is relief of 7.5%.
To maximise taper relief, where there are losses to set against capital gains, the losses are set against the gains with the lowest amount of taper relief first.
For example, if there is a loss of £1,000 and two gains, both of £2,000 but one has taper relief of 7.5%, the loss will be set against the gain that does not qualify for taper relief:
|
Gains Less losses Less taper relief
Taxable gain |
2,000 -1,000 0 -------- 1,000 |
2,000 0 -150 -------- 1,850 |