Capital Gains Tax

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Capital Gains Tax (CGT) is a tax on the profit from a sale of an asset that has increased in value and is a key consideration upon the disposal of a property. CGT is a wide area, and there are a number of key factors and reliefs to consider.

CGT is generally chargeable if you are a UK resident (including those who are temporarily non-resident) on gains made on the disposal of capital type assets. In practice, the most common disposals will be of land and buildings, but the tax would equally apply to the sale of other assets such as paintings and works of art.

In many cases, there will be reliefs available on the disposal of a property – and there will also be planning opportunities available. In our practice, the issue of CGT will arise on a regular basis, and our expert team can advise you in this complex area.

CGT on property disposals

For property sold on or after 27 October 2021, CGT needs to be reported and paid to HMRC within 60 days of the completion date, and this deadline applies to both UK and non-UK residents.

CGT typically applies to the sale or other disposal of:

  • A property that has not been used as a main home
  • A holiday home
  • Buy-to-let property
  • Inherited property that has not been used as a main home.

When selling a property, it is possible to claim reliefs to minimise the amount of CGT due, but it is important to note that not all of the reliefs will be available on each disposal. Some reliefs include:

  • Compulsory purchase order rollover relief
  • Private residence relief
  • Lettings relief.

If CGT is not reported and paid on time, interest and penalties may be payable, which is why it is important to plan ahead. If you are thinking about selling your property, get in touch with us today to see how our team can help optimise your position.

* If you are a solicitor or an estate agent, MG Group can support you and your clients throughout the process. Simply contact us to find out more.

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