Capital Gains Tax (CGT) is the tax on the profit that you make when you sell assets that has increased in value since you purchased it. The tax is on the profit, not on the total asset value.
Capital Gains Tax applies when you sell a second home, holiday home or buy-to-let property.
Understanding the rules and rates of Capital Gains tax on second homes is essential for property owners.
What is the Capital Gains Tax allowance in 2023/24 tax year?
Everyone gets an annual Capital Gains Tax allowance to offset Capital Gains Tax.
The Capital Gains Tax allowance decreased to only £6,000 in the 2023/24 tax year.
What is the Capital Gains Tax in 2024/25 tax year?
The government announced a further drop in the Capital Gains Tax allowance in the 2024/25 tax year to £3,000 per person.
How is Capital Gains Tax calculated?
Capital Gains Tax is on the profit made from selling a second property. They take the different between the property’s sale price and the original purchase price. Tax is then applied to the profit.
How much is Capital Gains Tax on property?
In the 2023/24 tax year, for basic rate taxpayers Capital Gains Tax is 18% on properties. For higher and additional rate taxpayers this is 28%.
Do I need to notify HMRC when I sell a second property?
It is essential to report any gains when selling a property to HMRC and then pay any CGT due. This can be done in your annual tax return. The deadline of tax returns is 31st January follow the end of the tax year in which the property was sold.
Should I transfer property to my spouse to reduce Capital Gains Tax?
If you are looking to sell a second property, you can book a no-obligation meeting with a financial adviser at Four Wealth Management for help mitigating your tax liabilities. Tax rules are complex and constantly changing. A financial adviser can help you to make the most of your money and use any tax reliefs and allowances that are available to you.
Book online now or call us on 0117 973 0500.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
