How much is the Capital Gains Tax on property?

If you sell an asset for a profit, then you will have to pay Capital Gains Tax (CGT). Property is no different.

How much you actually pay then depends on two things:

• Your total taxable income for the year 
• How big your profit was from selling the property

Capital gains tax rates vary depending on what you’re selling. What is always true though is that you only pay CGT on the profit, not the sale price.

How much will I pay?

You can simply use our Capital Gains Tax calculator to see what your tax bill could be.

When do I not owe CGT?

You won’t have to pay Capital Gains Tax on property when:

• You’re selling your main home
• If your profit is less than the tax-free Capital Gains allowance
• If you’ve made a capital loss on a buy-to-let property sold in a previous year

If you have let out either part or all of your home for a while, you can also apply for letting relief. 

This will be the lowest of the following three things:

• The gain you receive from the letting proportion of the home 
• The amount of private residence relief you can claim 
• £40,000

What costs can I claim?

• The price you bought the property
• Stamp duty
• Any legal costs (solicitors’ or agents’ fees)
• Any improvements, refurbishing, extensions, etc. 
• Not maintenance, mortgage payments or interest

What if it’s a jointly owned property?

Simple! If you share ownership of the property, you will both benefit from the Capital Gains allowance. 

What if I have more than one home?

You can nominate which one is your main home. It doesn’t have to be where you live most of the time.

Bear in mind, married couples and civil partners can have only one main home between them. The other property will be classed as a second home.

Do I pay CGT if I give a property as a gift?

If it has increased in value since you bought it, then yes. You can read more about CGT when gifting a property here.

How do I pay CGT if I sell a property?

Until April 2020 you had two options:

• You either filed a Self Assessment tax return
• You used HMRC’s Real Time Capital Gains Tax Service

However, the rules changed in April 2020. All UK tax residents who sell property for a profit (except, of course, your home) have to use only the Real Time Capital Gains Tax Service. 

How the real time service works:

• You’ll get a payment reference number instead of a UTR
• You won’t have to file a tax return every year
• You’ll need to report and pay your CGT bill within 60 days

This means that you won’t need to file a self assessment unless your income changes significantly during the year (there are different CGT rates for basic rate taxpayers and higher rate taxpayers), or if you have another reason to file a tax return (for example, self-employment income). 

I have no idea how much Capital Gains Tax I owe! 😫

Don’t worry, it can be confusing! Let one of our accredited accountants talk you through Capital Gains Tax. Just book a consultation here!