Capital taxes

• Inheritance tax - extension of agricultural property and woodlands relief to land in the European Economic Area [EEA]
• Chargeable gains and offshore funds

• Capital gains tax 2009/10 rates
• Inheritance Tax 2009/10 rates

Inheritance tax - extension of agricultural property and woodlands relief to land in the European Economic Area [EEA]

Legislation will be introduced in Finance Bill 2009 to extend inheritance tax agricultural property relief and woodlands relief to property in the [EEA]. Property qualifying for this extended IHT relief will also qualify for capital gains tax holdover relief. The extension of the relief will be available from 22 April 2009, as well as from an earlier date in certain circumstances including holdover relief for prior disposals of agricultural property in a qualifying [EEA] state.

Chargeable gains and offshore funds

The chargeable gains treatment of investments in contract-based offshore funds, which are transparent for the purposes of tax on income and gains, will be amended from 1 December 2009. An interest in a transparent offshore fund will be an asset for the purposes of calculating capital gains tax on chargeable gains, and it will no longer be necessary to consider disposals of the underlying assets when computing the chargeable gain.

Elections into the new treatment can be made on or after 22 April 2009 and can be applied retrospectively back to the tax year 2003/04. Partnerships that are transparent for tax purposes will not be affected by the change in the legislation, as they will be specifically excluded from the definition of offshore funds. Investors subject to corporation tax will continue to treat their gains as transparent for the purposes of tax at present, until the law is amended.