When selling a property in the UK, you may have to pay Capital Gains Tax (CGT). The amount of tax you will owe depends on a number of factors, including the value of the property, how long you have owned it and your personal circumstances.
What is the Capital Gains Tax Rate?
If you are a basic rate taxpayer, you will only pay CGT on profits above the capital gains tax allowance, which is currently £12,300. If you are a higher rate taxpayer, you will pay CGT at 28% on the entire profit (18% if you are a basic rate tax payer).
You may also have to pay CGT on your second home or on inherited property. However, there are reliefs available that could reduce or eliminate your tax bill.
If you are thinking of selling a property in the UK, it is important to understand the capital gains tax rules so that you can minimise your tax liability. By understanding the capital gains tax rules, you could save yourself a significant amount of money.
What is the capital gains tax allowance?
The capital gains tax allowance is the amount of profit you can make from the sale of an asset before you have to pay capital gains tax.
The current capital gains tax allowance is £12,300. This means that if you sell a property for a profit of less than £12,300, you will not have to pay capital gains tax.
If you are a higher-rate taxpayer, you will only be able to claim a proportion of the capital gains tax allowance. This is because higher rate taxpayers are only entitled to a basic rate tax band of £37,500.
Are there any reliefs available?
If you are selling your private residence, you may be eligible to claim Private Residence Relief on the gains you made by selling your home, and you may not have to pay any capital gains tax on it.
You may also be eligible to claim Letting Relief if you have lived in the same house as your tenants.
Do I pay Capital Gains Tax on an Inherited Property?
If you inherit a property from someone who has died, you do not have to pay capital gains tax on the sale of the property. This is because there is an exemption for properties that are inherited.
However, if you sell the property within two years of the date of death, capital gains tax may be payable. The rate of tax will depend on your marginal rate of income tax.
If you are thinking of selling an inherited property, it is important to get professional advice to ensure that you do not have to pay capital gains tax.
When is Capital Gains Tax Payable on a Second Home?
If you own a second home in the UK, you may have to pay capital gains tax on the sale of the property.
The amount of tax you will owe depends on a number of factors, including the value of the property, how long you have owned it and your personal circumstances.
If you are thinking of selling a second home, it is important to understand the capital gains tax rules so that you can minimise your tax liability.
Conclusion:
Capital gains tax rules are complex and can change over time. It is important to get professional advice if you are thinking of selling a property in the UK to ensure that you do not have to pay capital gains tax.
By understanding the capital gains tax rules, you could save yourself a significant amount of money.
