If you're thinking of selling a property, you'll need to know how to pay Capital Gains Tax in the UK. The rules are complex, and you may need to pay Stamp Duty Land Tax and inheritance tax if you transfer your property to someone else. If you're unsure about CGT, visit our Getting Help page for advice. It will help you understand your options and find a tax adviser.

 

What Is Capital Gains Tax?

If you've recently sold or transferred taxable property in the United Kingdom, you're going to be subject to CGT. The tax has a thirty-day reporting and payment window, and you must report any sales or transfers within that time period. Non-resident landlords are also required to report sales and transfers. Failing to pay the tax on time can result in penalties and interest. Learn more about the tax in the UK.

 

Triggers for Capital Gains Tax

There are many triggers for capital gains tax. Generally, if you sell a main home or a second home, you are subject to CGT. If the property was purchased from an estate, you'll be liable for CGT. If you sell the latter, however, you'll have to pay the full amount of CGT. There is a tax-free allowance for married couples and others owning joint property.

 

Non-Domiciled Foreign Nationals

The third scenario is for non-domiciled foreign nationals. These individuals, known as expatriates, live in the United Kingdom and must comply with UK tax regulations. This rule affects both British expats and those who live in the UK but have interests in UK property and buy-to-let agreements. The resulting tax liability can be significant. To avoid the risk of incurring a large tax bill, you need to plan ahead.

Who Is Capital Gains Tax For?

You may be wondering Who Is Capital Gains Tax For in The UK? This tax is charged on any profit you make when you sell chargeable assets, including UK property. In general, this includes any property that was not your main residence or land that was inherited. Whether or not you owe this tax will depend on your personal income and the value of the asset you sell. However, if you sell a property, it is essential to understand the tax rates and the timeframe for paying it.

 

Basic-Rate Taxpayer

A basic-rate taxpayer pays the lowest CGT rate (ten percent) and the highest rate (28%) for those above the basic-rate band. An additional-rate taxpayer who adds a gain will pay both rates. For non-residential property, however, you can choose to pay either the basic-rate or the higher rate of tax. A non-publicly listed business can also benefit from the Entrepreneurs' Relief scheme, which applies to non-public businesses.

 

What Are the Capital Gains Tax Rates in the UK?

Capital gains tax is levied on the sale of property, and is payable within 60 days. Between 6 April 2020 and 26 October 2021, it was 30 days. Capital gains tax is applicable to all types of property, including shares, inheritance, and certain gifts. It also applies to shares and assets transferred during divorce or civil partnerships. The tax rate varies according to the type of property sold and the number of years the taxpayer was out of the country.

 

Capital Gain Tax Rates on Property and Income

The capital gain tax rates on property and income from non-UK sources are different. Capital gains on non-UK property are exempted if the individual has lived in the property for at least 90 days in the tax year. In contrast, the tax rate on UK company shares is 20%. Non-UK residents must file a special non-resident return to avoid paying capital gains tax. But this tax exemption does not apply to assets held by non-UK residents.

How to Pay Capital Gains Tax?

In the UK, you'll need to figure out how to pay capital gains tax if you've recently sold an asset. These assets may include a main home, a second home, or even inherited property. The tax rate depends on how much you've made in the past year, but in general, you'll pay around 10% of the gain on your asset. In addition, you'll be required to pay an additional 8% if the property you've sold is a residential one.

 

Nonresident Landlords

For nonresident landlords, you'll need to report all sales of taxable property. You'll have a thirty-day window to report and pay the CGT due. If you sold your main residence within 30 days, you can use the "payment on account" service provided by the HMRC. If you're selling multiple properties, you must report them all to HMRC. Failure to pay the tax can incur penalties and interest.

 

Limited Company 

Property owned by a limited company won't be subject to capital gains tax. However, it will be subject to Corporation Tax, which currently stands at 19%, and is set to rise to 25% in April 2023. Despite the fact that a limited company doesn't pay capital gains tax, its property is considered a business and not a personal investment. However, it is still possible to have a property that increases in value beyond the taxable amount without paying capital gains tax. Using a calculator can help you figure out how much you'll have to pay.

 

Getting Help from a Tax Accountant

Getting Help from a Tax Accountant is a must if you have any assets that are subject to capital gains tax in the UK. Capital gains tax is charged when an individual sells a capital asset for a profit. For an individual, this tax is calculated as twenty percent to twenty eight percent of the gain made on the sale of the property. Non-UK residents with property in the UK will be taxed at a higher rate. However, the date of disposal is not always when money is received; it can be when a contract is exchanged.

Conclusion

A tax accountant in Cardiff can assist you with your capital gains tax in the UK and other aspects of property ownership. If you've received a gift from a family member, then it is likely that you'll owe a capital gain tax on the sale. In this case, hiring a Tax Accountant will make sure that your capital gains tax bill is smaller. However, if you inherited a property, you'll be required to obtain a valuation.