Do I need to pay Capital Gains Tax if I gift property?

If you gift someone a property, you will usually have to pay Capital Gains Tax (CGT) if it increased in value since you bought it.

It’s as if you sold the property for a profit, then took that money and gave it to them as a gift instead.

You don’t need to pay CGT if:

• You’ve lived there the entire time (it was your home)
• Or you give it to your spouse
• Or you put it into a trust for the benefit of your child. In this situation, it will be deferred until your child sells the property

How much CGT will I have to pay?

For the 2023/2024 tax year the Capital Gains Tax rates for property are:

• 18% for your entire Capital Gains profit from property if your overall annual income is below £50,000
• 24% for your entire Capital Gains profit from property if your overall annual income is above the £50,270 threshold

You also have a £3,000 Capital Gains tax allowance. This means that:

• Your Capital Gains up to £3,000 are tax free
• If you made less than £3,000 in profit you don’t need to pay any tax.

Check our our Capital Gains Tax calculator to work out how much you need to pay.

Can I sell my property “at a friendly low price” so I don’t pay CGT?

Don’t.

If you’re giving it to a “connected person” (children, parents, siblings, etc.), HMRC will still ask you for CGT as if the property was being paid for at market value.

Oh, and you might also get a fine.

Are there any other taxes?

Yes: stamp duty, inheritance tax, and sometimes rental income tax.

Read more in our guide to gifting property.

How do I pay CGT for gifted property?

Until April 2020 you could either:

• File a Self Assessment tax return
• Use HMRC’s Real Time Capital Gains Tax Service.

However, starting from April 2020, all UK tax residents who gifted property and were liable for CGT had to use only the Real Time Capital Gains Tax Service.

What this means:

• You get a payment reference number instead of a UTR
• You won’t have to file a Self Assessment every year
• You’ll need to declare and pay your CGT bill within 30 days

Still not sure if you owe CGT?

We can help. We offer one-off, personal tax advice from an accredited accountant. Speak to  CGT accounting expert and clear up any confusion. Learn more.