Do I need to pay Capital Gains Tax on gifted property?

You’ll usually have to pay Capital Gains Tax (CGT) on gifted property if its value has increased since you bought it. This is because HMRC treats it as if you sold the property for a profit and then gifted the money.

When you don’t need to pay CGT on gifted property

There are some exceptions where CGT doesn’t apply:

• 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 is CGT on gifted property?

CGT on gifted property isn’t one-size-fits-all; it depends on your income and how much profit you’ve made from the property’s value increasing:

Check out 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?

Tempting, but no.

If you’re gifting or selling the property to a “connected person” (like your children, parents or siblings), HMRC will still calculate CGT on gifted property as if it were sold at full market value.

Trying to get around the system could also result in a fine.

Are there any other taxes to consider?

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

Read more in our guide to gifting property.

How do I pay CGT on 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 capital gains tax (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 a CGT accounting expert and clear up any confusion. Learn more.