HMRC helpsheet to support residential property sellers with new CGT rules

23rd July 2021

New guidance will help homeowners understand the implications of capital gains tax (CGT) when selling UK residential property, it has been revealed.

HM Revenue & Customs (HMRC) said the new helpsheet – which can be downloaded here – will support taxpayers in complying with new reporting obligations.

The guidance comes after major changes to the regime, which reduce the time sellers have to report and pay capital gains tax from up to a year to just 30 days.

If you own residential property in the UK, here’s what you need to know.

What is capital gains tax?

Capital gains tax – or CGT for short – is a tax on the profit when you sell an asset that has increased in value.

When does CGT apply?

You do not have to pay CGT on every asset you sell. For example, you do not have to pay tax when you sell your main residence (the one you live in) or some personal belongings valued at less than £6,000.

CGT is due, however, on any other residential property you sell. These are known as “chargeable assets”.

What is the rate of CGT?

CGT is paid at a rate of 28 per cent on gains from residential property and 20 per cent on gains from other chargeable assets, but only after exceeding the CGT allowance. This is £12,300 or £6,150 for trusts.

What are the new reporting rules for residential property?

If you sold residential property in the UK on or after 06 April 2020 you must report and pay any tax due within 30 days of selling it. You can do so using a Capital Gains Tax on UK property account.

You may have to pay interest and a penalty if you do not report gains on UK property within 30 days of selling it.

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