PROPERTY CAPITAL GAINS TAX

UK RESIDENTS

In recent years we are seeing more and more of our customers regaining the value in their rental portfolio, and many have made significant gains in recent years from selling some, or all, of their assets. If you have sold any assets at all, such as company shares or property, then we can ensure that your capital gain liability is reduced to as low as possible by advising you on all of the allowable expenses that you are entitled to claim.

There are lots of expenses from many years ago when you first purchased the asset which you may even have forgotten about but could save you thousands of pounds in tax today.

We will guide you and explain the whole process thoroughly so that you have confidence in your tax position. Often when a property is sold then rental income also ceases; if this applies to you then we will ensure that HMRC closes your tax record and stop requesting a self-assessment tax return from you going forward.

Regardless of how much tax you may owe to HMRC, we will charge you a fixed fee for your UK Tax Return which we will quote for you in advance. Our fee for preparing and submitting a Capital Gains Tax return is £475. There is a reduced fee available for the second person if you owned the asset in joint names.

The reporting standard for CGT has changed from 6th April 2020 – after this date you will only have 60 days following completion of the sale to report the disposal of your property and to provide the required calculation to HMRC. After the new 60 day reporting deadline has passed, late filing penalties will apply. It is always best to organise your tax reporting when you instruct your solicitor - our friendly staff are available to speak with you at your convenience to ensure that you do not miss an important filing deadline.

We have prepared a help sheet specifically for those who have disposed of an asset and made a Capital Gain which is liable for tax, so please contact us today to request this help sheet.

OUR PROPERTY CAPITAL GAINS SERVICES

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ARE YOU THINKING OF SELLING A PROPERTY?

Selling an asset is always a significant decision, and most likely you will be forward thinking about what you might do with the sale proceeds. At this stage it is always important to consider the impact of any Capital Gains Tax payable as this will directly affect how much is left in your pocket. We can produce an accurate CGT forecast for you on an estimated basis using your anticipated future sale price and date. Tax positions are always best considered in advance as there is often very little planning that can be done retrospectively after a sale. There have also been significant changes that came into effect from April 2020 which will see many individuals CGT bills increase – please read below regarding PPR restrictions.

We can help you understand what your tax position is likely to be, which can help you best make an informed decision. Speak to a Tax Consultant today who will be pleased to answer your CGT queries.

Changes to Principle Private Residence (PPR) Relief and Lettings Relief

Until recently, there were two generous reliefs available to those who sell a rental property that was formally their primary residence. These are called Principle Private Residence Relief, and Lettings Relief.

In all cases where a former home is involved, these two reliefs hugely reduced the amount of Capital Gains that is payable to HMRC on the sale of the property. However from April 2020 onwards PPR has been significantly reduced, and the associated Lettings Relief has effectively being scrapped for the vast majority of taxpayers.

This is yet another major tax reform that is going to be very costly to Landlords – if you are seriously thinking of selling your former UK home then now would be a great time to consider the impact of this ahead of listing your property for sale. Speak to us today with regards to our Capital Gains forecasting services.

WHY USE A TAX AGENT?

We are professional intermediaries that work for you, not for HMRC. We can discuss a wide range of taxation and your specific areas of concern. We can also discuss scenarios that you are considering and hypothetical situations that make the best use of tax planning.

Using a tax agent removes the general stress and hassle of trying to deal with a process that you may not completely understand or be familiar with. Often dealing with the tax office can be daunting and confusing so we will act as an intermediary and explain everything to you jargon free.

As authorised partners of HMRC, tax agents are specialist companies who are familiar with the UK tax system – we understand what you can and can’t claim for a range of specific situations; we aim to save you a lot of time and money.

At UK Tax Returns we have special agent dedicated phone lines direct to HMRC tax office which are not available to the general public. We are able to talk to HMRC about your tax affairs very quickly at any point, and we can access specialist guidance from technical advisers within HMRC whenever the need arises.

What is the annual exemption for CGT?

For UK tax residents, in the 2023/24 tax year you can declare capital gains of £6,000 without having to pay any tax to HMRC. This CGT annual exemption is in addition to the income tax free allowance for other income in the UK, such as rental income. For the 2024/25 tax year, the annual exemption for CGT is decreasing to only £3,000.

What are the rates of tax for CGT?

The rate of Capital Gains Tax was lowered for most asset classes in the 2016/17 tax year going forward. The new rates are now 10% basic rate and 20% higher rate, which have been reduced from 18% and 28% in the earlier tax years. However, if you have disposed of a residential property that was not solely used as your main home, such as a Buy to Let investment, then the previous higher rates of 18% and 28% still apply.

If I have made a loss do I still need to declare this?

Yes – the vast majority of losses will still need to be declared to HMRC. Whenever you dispose of an asset such as property or shares, you will need to report all of the relevant figures to HMRC by completing the Capital Gains section of the Self-Assessment tax return. If you have made a Capital Gains tax loss then you can carry this figure forward each year by completing your tax return and this loss can stay on your tax account to help reduce any taxable gains that you may make in the future.