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If you sold a residential house or flat in the UK after April 2020, then you might not have known about some recent Capital Gains Tax (CGT) changes that were made by HMRC. If you’re unaware of the tax changes, then it’s important you’re aware of how they can affect you. You’ll also need to know what to do differently when reporting and paying CGT on residential property.
Capital Gains Tax is a type of tax that you pay when you sell an asset for profit. This can include both residential and commercial property, as well as shares, cryptocurrency and more. You only have to pay CGT if the profit you make is above the Capital Gains Tax allowance. For the 2024/2025 tax year, this is £3,000.
If the profit is over the CGT allowance, then you need to file a Self Assessment tax return. You do this to declare the profit and pay tax on it. Take a look at how much tax you could owe with our Capital Gains Tax calculator below:
Your total capital gains tax (CGT) owed depends on two main components:
Your overall earnings determine how much of your capital gains are taxed at 10% or 20%.
Our capital gains tax rates guide explains this in more detail.
In your case where capital gains from shares were £20,000 and your total annual earnings were £69,000:
You pay no CGT on the first £12,300 that you make
You pay £127 at 10% tax rate for the next £1,270 of your capital gains
You pay £1,286 at 20% tax rate on the remaining £6,430 of your capital gains
The main changes that were made to Capital Gains Tax were regarding the deadlines for paying it after selling a residential property in the UK.
Since 6th April 2020, if you’re a UK resident and sell a piece of residential property in the UK, you now have 30 days to let HMRC know and pay any tax that’s owed. If you don’t, HMRC can fine you, as well as adding additional interest to what you owe.
These changes aren’t just limited to UK residents. It’s therefore important that everyone involved in the sale of a residential property fully understands them. This includes any non-UK residents that might be involved.
HMRC state that if you live in the UK, you might need to report and pay CGT within 30 days if you sell:
This doesn’t apply to you if:
Non-UK residents are advised to continue to report their sales or interests in UK property, regardless of whether there is a CGT liability within 30 days of completion. They can no longer defer their CGT payment via a Self Assessment tax return. Any tax you owe must be paid within this new 30-day reporting and payment period.
Any agents who act on behalf of a customer who sells or disposes of a residential property in the UK, will need to:
If you’re a trustee who sells or disposes of UK residential property held in a UK resident trust then you must follow the new guidance the same way as UK resident individuals. You’ll also need to register the trust on HMRC’s Trust Registration Service to get a Unique Taxpayer Reference (UTR).
If your trustee sells or disposes of residential property or commercial property that’s held in a non-UK resident trust, then the same rules apply to CGT as they do with non-UK residents.
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