15 things every UK landlord should know about Capital Gains Tax

You may not have paid any Capital Gains Tax so far. It’s not as common as Income Tax, National Insurance or VAT. And you may not be planning to pay Capital Gains Tax for some time yet, but one day that may change, so it pays to understand a few Capital Gains Tax basics.

Here are a few tips from Mike at GoSimpleTax that might enable you to plan now to minimise your Capital Gains Tax liabilities.

So, what key Capital Gains Tax facts should you and other UK landlords know?   

Capital Gains Tax: the basics

1 Capital Gains Tax (CGT) can be payable on the gain (ie profit) you make when you “dispose of” (ie sell, give away or swap) a “chargeable asset” (ie something valuable that you owned).

2 You only pay CGT on the gain, which is the difference between how much you bought a chargeable asset for (or value when it came into your possession) and how much it was worth when you disposed of it.

3 Chargeable assets include most personal possessions worth £6,000 or more, including non ISA or PEP shares, a business or its assets, property that isn’t your main home (eg rental properties) or your main home if it’s very large, you’ve rented it out or used it for business.

4 You may have to pay CGT if you’re domiciled in the UK but sell an overseas property or dispose of another chargeable asset located overseas.

5 You may have to pay CGT on gains you make on UK property/land even if you’re non-resident for tax purposes. CGT is not payable on other UK assets unless you return to the UK within five years or you sell shares in a company whereby 75% or more of its gross asset value is UK land.

6 Capital Gains Tax is not payable on assets that you gift or sell to your spouse or civil partner (as long as you’re not separated and have lived together in that tax year, but you can’t gift assets to their business for sale).

Did you know? Disposal of cryptocurrency can be subject to Capital Gains Tax, but disposal of your car isn’t. Moreover, CGT does not apply to ISAs, PEPs, UK government gilts, Premium Bonds, betting or lottery winnings.

Capital Gains Tax reliefs, allowances and rates

6 If you co-own a chargeable asset, you only pay CGT on your share of the gain post disposal. This can include rental property, of course.

7 There is a CGT tax-free allowance – the “Annual Exempt Amount” – which is worth up to £3,000 a year (£1,500 for trusts – 2025/26 tax year). CGT is only payable on gains above this threshold.

8  Tax reliefs may be claimable on some chargeable assets, while losses can also be deductible. They can both reduce your CGT liability significantly.

Need to know! Even if your total annual gains are below the tax-free allowance and no CGT is due, you must report your gains in your tax return if you sold the asset(s) for more than £50,000 and you’re registered for Self Assessment.

9 The amount of Capital Gains Tax you pay is determined by which type of asset you sold, the Income Tax bracket into which your total income falls and the value of your gain.

• If you’re a higher or additional rate Income tax payer (ie annual income of  £50,271or more), you’ll pay 24% on your gains from disposal of residential property and other chargeable assets (2025/26 tax year).
• If you’re a basic rate Income Tax payer (ie annual income between £12,571 and £50,270), you’ll pay 18% on your gains from disposal of residential property and other chargeable assets (2025/26 tax year).

Need to know! CGT rates have increased significantly since 30 October 2024. You can find out CGT rates and thresholds for previous years on government website GOV.UK.

Reporting capital gains

10 You won’t get a Capital Gains Tax bill from HMRC. You must report your total gains above your tax-free allowance during a tax year.

11 If you’ve sold a UK residential property with a completion date of 27 October 2021 or later, you must report your taxable capital gains and pay any tax due within 60 days.

12 Landlords (or ex-landlords) must use a Capital Gains Tax on UK property account to report and pay any CGT due on UK residential property. You sign in with your HMRC online username and password to use this service (contact HMRC if you need help).

13 To report gains using this service you’ll need the:

• full property address and postcode
• date you became the property owner
• date you exchanged contracts when you were disposing of the property
• date you stopped being the property’s owner (ie the completion date)
• value of the property when it became yours
• value of the property when you disposed of it
• costs of buying, selling or improving the property
• details of any tax reliefs, allowances or exemptions you want to claim
• property type, if you’re a non-resident.

14 If you have other taxable gains that you need to report (eg gains made from selling a business), you complete an annual Self Assessment tax return. You’ll need to register for Self Assessment, if you’re not already registered. As well as the main eight-page tax return (ie the SA100), you’ll also need to complete supplementary pages Self Assessment: Capital gains summary (SA108).

15 Before you can report any capital gains via Self Assessment you’ll need to know:

• how much you bought and sold the asset for
• the dates when your ownership began and ceased
• details of the costs of buying, selling or improving the asset
• any tax reliefs/allowances you can claim
• calculations for each capital gain/loss you need to report.

Need to know! More in-depth information about how to report and pay Capital Gains Tax on UK property can be found on government website GOV.UK.

If you are planning to sell one or more of your rental properties or you know you will soon receive another taxable gain from disposal of another chargeable asset, seeking tailored professional tax advice is highly recommended.

About GoSimpleTax

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