UK Capital Gains Tax on Property
Understanding Capital Gains Tax on Property in the UK
Capital gains tax (CGT) is a tax on the profit made from selling certain assets, including property. In the UK, CGT is charged on the gain, rather than the sale price. This means that if you sell a property for more than you paid for it, you may be liable for CGT.
The rate of CGT in the UK depends on your income tax band. Basic-rate taxpayers pay 18% on gains from residential property, while higher-rate and additional-rate taxpayers pay 28%. For non-residential property, the rates are 10% and 20% respectively.
To calculate the gain, you need to know the purchase price and the sale price of the property. You can also deduct certain costs, such as solicitors’ fees and estate agents’ fees, from the gain. If you have made improvements to the property, you may be able to claim these as a deduction.
There are some exemptions from CGT, including your main home, which is usually exempt from CGT under Private Residence Relief (PRR). Other exemptions include certain types of property, such as those used for business purposes.
CGT can be complex, and it’s essential to seek professional advice to ensure you are meeting your tax obligations. A tax expert can help you navigate the rules and ensure you are taking advantage of all the exemptions and reliefs available.
In addition to CGT, there may be other taxes to consider when selling property in the UK. These include stamp duty land tax (SDLT) and value added tax (VAT). SDLT is a tax on the purchase of property, while VAT is a tax on certain goods and services.
It’s also important to consider the impact of Brexit on the UK property market and CGT. While the UK’s exit from the EU has created uncertainty, it’s unlikely to have a significant impact on CGT rates or exemptions.
Overall, CGT is an important consideration for anyone buying or selling property in the UK. By understanding the rules and seeking professional advice, you can ensure you are meeting your tax obligations and taking advantage of all the exemptions and reliefs available.
