SEARCH, INDEX, UPDATES, CONTENTS, SERVICES, TAX PLANNING, TAPER RELIEF
Taper relief is a complex subject, full of traps for the unwary, and deserves careful consideration with a tax adviser on a one to one basis.
There are whole books devoted to this one specific subject, so this page is a very limited outline for disposals by individuals after 5 April 2000.
If certain conditions are satisfied, an asset may attract business taper relief, but changes in circumstances can reclassify the same asset as a non business asset and reset the taper clock to zero.
An asset which has at any time not qualified as a business asset, either because of the circumstances of the company or the shareholder, will not attract the maximum taper for 12 years unless positive action is taken early. We may be able to help you cure a "tainted" business asset if you contact us.
Effect of Taper Relief on tax rate on gains of individuals -
Non-business assets
| No. of whole years in qualifying holding period | % of Gains chargeable | % of Gains non-chargeable | Effective tax rate for higher rate taxpayer | Effective tax rate for basic rate taxpayer |
| 0 | 100 | 0 | 40% | 20% |
| 1 | 100 | 0 | 40% | 20% |
| 2 | 100 | 0 | 40% | 20% |
| 3 | 95 | 5 | 38% | 19% |
| 4 | 90 | 10 | 36% | 18% |
| 5 | 85 | 15 | 34% | 17% |
| 6 | 80 | 20 | 32% | 16% |
| 7 | 75 | 25 | 30% | 15% |
| 8 | 70 | 30 | 28% | 14% |
| 9 | 65 | 35 | 26% | 13% |
| 10 or more | 60 | 40 | 24% | 12% |
Business assets (to 5 April 2002 when a new 2 year taper is promised)
| No. of whole years in qualifying holding period | % of Gains chargeable | % of Gains non-chargeable | Effective tax rate for higher rate taxpayer | Effective tax rate for basic rate taxpayer |
| 0 | 100 | 0 | 40% | 20% |
| 1 | 87.5 | 12.5 | 35% | 17.5% |
| 2 | 75 | 25 | 30% | 15% |
| 3 | 50 | 50 | 20% | 10% |
| 4 or more | 25 | 75 | 10% | 5% |
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