Advisers could benefit from entrepreneurs’ relief

It is also falling from 18 per cent to 10 per cent for gains within the basic rate band.

These new rates will apply from 6 April 2016 on most gains, but carried interest – the share of profits received by the investment manager of a private equity or hedge fund in excess of his investment share – and gains on residential property will remain at the old rates.

This will ensure that the new CGT charge on non-residents on the disposal of residential property will still be charged at 28 per cent.

Entrepreneurs’ relief will be extended to long-term external investors in unlisted trading companies. The relief, up to a lifetime limit of £10m, will apply to newly issued shares purchased on or after 17 March 2016 provided they are held for a minimum of three years from 6 April 2016.

This will enable individuals to finance a business and obtain the 10 per cent entrepreneurs’ rate without having to work in the business. An individual could qualify for £20m at the entrepreneurs’ rate of 10 per cent if they invested and worked in one business and helped finance another.

Several changes will be made to entrepreneurs’ relief in the Finance Bill 2016 and backdated, to correct some inadvertent consequences of changes made by the Finance Act 2015.

Some changes to inheritance tax (IHT) announced in the Summer Budget or the Autumn Statement have been confirmed, and will be included in the Finance Bill 2016.

An individual could qualify for £20m at the entrepreneurs’ rate of 10 per cent if they invest and work in one business

Undrawn funds within a pension fund that have been designated for drawdown by the member but not actually drawn at the date of the member’s death, will not be liable for IHT.

This measure will be backdated to deaths on or after 6 April 2011.

The residence nil-rate band up to a maximum of £175,000 per person by the time it is fully introduced in April 2020 and £350,000 for a couple on second death will still be available if the main residence has been downsized, as long as the downsizing was on or after 8 July 2015.

The main residence at death or before downsizing has to be worth at least £350,000 for a couple to benefit from the maximum relief and it has to be bequeathed to direct descendants.