Capital Gains Tax is payable on any taxable gain realised by a UK taxpayer in any one tax year upon the sale of an asset. However, there are several exceptions and exemptions available to individuals and, in addition, individuals enjoy an annual tax free allowance, under which no capital gains tax (CGT) is payable.
Some assets are excluded from Capital Gains Tax including ISAs, PEPs or Government Guilts. An individual’s primary residence (usually their home) is currently exempt for the purposes of CGT in most cases and so any gain realised upon its disposal will not usually attract a CGT charge. However, if your home is let out or you are using part of it for business purposes then you may have to pay CGT on all or part of any gain realised.
In any event, even when Capital Gains Tax is payable, it’s important to realise that capital gains tax is payable on the gain after allowing for the costs of the property purchase, the costs of any improvements and the subsequent sale of the asset. Inflation must also be taken into account when calculating the real terms gain. It’s well worth taking professional advice as each case should be judged on its own merits.
Capital Gains Tax is payable if you dispose of an asset that is subject to CGT and so merely giving away your asset or trying to sell it for less than it is worth in order to reduce your CGT liability is unlikely reduce your CGT liability! The tax man will look at the asset’s ‘market value’. That said, gifts to a spouse or charity are usually excluded from Capital Gains Tax.
If you own more than one property (e.g. a holiday home or buy to let) you must elect one as your primary residence for tax purposes. In such cases, the sale of your other premises will be deemed chargeable for CGT purposes when a gain is realised.
The current annual Capital Gains Tax allowance for an UK tax payer for 2016-17 is £11,000. This has been the same since 2015. Remember, if you own an asset jointly, you may well have two allowances to set against the gain in any tax year. Furthermore, if you have lost money on the sale of taxable assets in the past you may want to set these losses against current gains. Check with HMRC for further details.
If you pay higher rate Income Tax then you’ll pay 28% CGT on your gains from residential property and 20% CGT on your gains from other chargeable assets.
If you are a basic rate taxpayer then it’s likely you will pay Capital Gains Tax at 18% on residential property and 10% on other gains. However, if your gains are sufficient to put you into a higher rate income tax bracket when added to your taxable income, your CGT rate may increase.
Related articles:
Download our Free First Time Buyers Guide
Recent posts
A recent study by Boon Brokers where 1,000 people who had used an estate agent over the last year were surveyed, showed that a whopping 52% said they were pressured into using the estate agents’ in-house mortgage broker.
When will mortgage rates fall further?
4 days ago
Analysts are predicting further rate cuts this year, with the next one possibly coming down to 4% when the Bank of England’s Monetary Policy Committee meet on Thursday 7th August 2025.
The Financial Conduct Authority (FCA) has shared new changes to mortgage rules with the aim to simplify remortgaging, and encourage competition within the mortgage market.
Lloyds boost lending for first-time buyers
11 days ago
Lloyds Banking Group has jumped on the bandwagon to boost lending for first-time buyers as they allocate an additional £4 billion to help first-time buyers on to the property ladder.
As the Loan to Income (LTI) cap has been increased to 5.5 times income, applicants who fit the First Time Buyer Boost criteria could borrow up to 22% more.
The government is introducing mortgage reforms to boost homeownership, stimulate economic growth, and make the housing market more accessible, especially for first-time buyers.
Chancellor Rachel Reeves has announced the most significant mortgage reforms in over a decade—great news for those dreaming of homeownership.
Nationwide ease criteria for first-time buyers
14 days ago
Nationwide ease their ‘Helping Hand’ mortgage designed to help first-time buyers get onto the property ladder by allowing them to borrow up to six times their income.
Ways to save money over the summer holiday
20 days ago
Keeping the kids entertained over the six-week summer holidays isn’t always easy, especially with the cost-of-living making it even more difficult. Below is a list of fun, inexpensive ideas to do over the break
The Financial Conduct Authority (FCA) has published a discussion paper about the future of the mortgage market in a bid to improve access for first -time buyers, self-employed, and those borrowing in retirement.
More information
Trusted by
