Capital Gains Tax on UK Land and Property FAQs - Ad Valorem

I have just sold my rental property, do I need to tell HMRC?

Where an individual sells or gifts UK residential property this is a disposal for Capital Gains Tax purposes.

Since April 2020 it has been a requirement that this disposal is reported during the tax year in which the disposal takes place rather than on the individual’s tax return at the end of the year.

This will need to be reported to HMRC within 60 days of the date of completion, any tax due must also be paid by this date.

What rate of tax do I pay on the sale?

Capital Gains Tax is calculated on the difference between the sales proceeds received and the original purchase price. You are also able to deduct certain improvement costs and certain selling or purchase costs.

This gain is then subject to Capital Gains Tax at the rates of 18% or 24% depending on the levels of the individual’s income (please note that for disposals taking place on or before 5^th April these rates are 18%/28%).

You may also be entitled to a tax-free allowance to set against the gain, depending on your individual circumstances.

I sold a property but I think I made a loss – do I still need to file a return?

A return is required within 60 days for any property which is sold at a gain. If the property is sold at a loss or at no taxable gain (for example where the gain falls within your tax-free allowances) no return is required.

I just sold the house that I live in do I need to file a return?

Most people who are selling their only or main home are not required to file a return as any gain arising whilst the individual is living in the property as well as some other periods of “deemed occupation” is exempt from tax. However, a return may be required if you have not lived in the property for the entire time you have owned it.

I gave the house to my children but no money changed hands, do I still need to file a return?

Where a property is gifted, or sold at undervalue, this is a chargeable disposal for Capital Gains Tax purposes.

In this circumstance, the gain is calculated on the open market value of the property at the date of the transfer.

I didn’t realise I needed to file a return and the 60 day deadline has now passed – what do I do?

It is possible to file a Capital Gains Tax return after the 60 day deadline has passed, however you may incur penalties and interest on the late filing. There is an immediate penalty of £100 which is incurred if the return is not filed within 60 days of the date of completion, these penalties and interest do increase the later the return is filed.

 How can Ad Valorem help?

If you have, or are planning to, sell or gift a UK residential property, you will be required to file a return. Ad Valorem can help you by:

• Calculating your capital gain.
• Reviewing your entitlement to any relief to reduce your Capital Gains Tax liability.
• Reviewing your expenditure on the purchase/sale/improvement of the property.
• Filing your Capital Gains Tax return.

Please do hesitate to get in touch at enquiries@advaloremgroup.uk if you would like to know more about our Capital Gains Tax service.