business & tax

Taper Relief: Capital Gains Tax CGT: 6 April 1998 to 5 April 2008

Taper Relief Changes:  Please note that with effect from 6 April 2008 taper relief for Individuals, Trusts and Business Assets was withdrawn.  A new flat capital gains tax rate applies to all gains and a new entrepreneurs relief introduced for business assets.

Taper Relief  started on 6 April 1998 and was withdrawn on 5 April 2008

If you disposed of an asset and made a gain, taper relief used to reduce the amount of any chargeable gain.

Taper Relief worked as follows:

The amount of reduction depended on how long the asset had been held after April 1998.

Individuals and Trusts - Years Held (after 1998) and percentage of gain chargeable:

• 0 Years owned and then disposed of. Percentage of gain taxable is 100%
• 1 Year owned and then disposed of. Percentage of gain taxable is 100%
• 2 Years owned and then disposed of. Percentage of gain taxable is 100%
• 3 Years owned and then disposed of. Percentage of gain taxable is 95%
• 4 Years owned and then disposed of. Percentage of gain taxable is 90%
• 5 Years  owned and then disposed of. Percentage of gain taxable is 85%
• 6 Years  owned and then disposed of. Percentage of gain taxable is 80%
• 7 Years  owned and then disposed of. Percentage of gain taxable is 75%
• 8 Years  owned and then disposed of. Percentage of gain taxable is 70%
• 9 Years  owned and then disposed of. Percentage of gain taxable is 65%
• 10 Years owned and then disposed of. Percentage of gain taxable is 60%

Please note that if you owned the asset before 5 April 1998, you are entitled to an additional years allowance, although this benefit becomes irrelevant in 2008 (Businesses lost this allowance in 2000).

Businesses also used to benefit from taper relief on gains.

Businesses - Years Held (after 1998) and Percentage of Gain Chargeable

• 0 Years owned and then disposed of. Percentage of gain taxable is 100%
• 1 Year owned and then disposed of. Percentage of gain taxable is 50%
• 2 Years owned and then disposed of. Percentage of gain taxable is 25%
• 3 Years owned and then disposed of. Percentage of gain taxable is 25%
• 4 Years owned and then disposed of. Percentage of gain taxable is 25%
• 5 Years owned and then disposed of. Percentage of gain taxable is 25%
• 6 Years owned and then disposed of. Percentage of gain taxable is 25%
• 7 Years owned and then disposed of. Percentage of gain taxable is 25%
• 8 Years owned and then disposed of. Percentage of gain taxable is 25%
• 9 Years owned and then disposed of. Percentage of gain taxable is 25%
• 10 Years owned and then disposed of. Percentage of gain taxable is 25%