Capital Gains Tax Changes

 

As discussed when we reported on the Autumn budget announcement, anyone selling a property is affected by changes to the Capital Gains Tax.

Previously there was a window of 30 days for taxpayers to report gain and pay tax owed from selling a property.  If the property was sold between 6th April 2020 to 26th October 2021, you would have been required to report and pay the Capital Gains Tax within 30 days.

As of the Autumn Budget announcement, this window was increased to 60 days.  Therefore if you sold a property on or after 27th October 2021, you would have 60 days to report and pay the Capital Gains Tax owed.

As a basic-rate taxpayer, if you make a gain after selling a property, you’ll pay 18% capital gains tax.  If you are on a higher rate of tax then you will be required to pay a higher rate of tax of 28%. Gains from selling other assets are charged at 10% for basic-rate taxpayers, and 20% for higher-rate taxpayers.

You only need to pay these rates on the gains that exceed your capital gains allowance.

 

Tax year 2021-22 2022-23
CGT allowance for an individual £12,300 £12,300
Couple’s allowance (married or in a civil partnership only) £24,600 £24,600

 

If you don’t make full use of your Capital Gains Tax allowance in a given tax year, you aren’t allowed to carry it forward to the next.

 

Exceptions to Capital Gains Tax on Properties

  • You’re eligible for full private residence relief
  • You sold the property to your spouse or civil partner (you’ll be charged based on the gain made during the period it was owned by you as a couple, rather than since the asset was passed to your partner.)
  • The profit you made was within your tax-free allowance
  • You sold the property for a loss
  • The property is outside the UK

 

 What Capital Gains Tax Applies to

However, Capital Gains Tax is not just a tax on properties – it’s a charge on money you make from selling an asset. Different rates are applicable depending on what you’re selling.  These assets can be any of the following

  • Property
  • Jewellery
  • Vintage cars
  • Cryptocurrency
  • Stocks and shares
  • And more!

After selling an asset, you only owe Capital Gains Tax on profits above £12,300. Anything less than that is tax-free

For example:

Type of asset Basic rate

(income < £50,270)

Higher rate

(income > £50,270)

Shares 10% 20%
Residential property 18% 28%
Cryptocurrency 10% 20%
Other 10% 20%

 

Have a question?  Speak to the Robinsons team

 

 

 

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