A Guide to Capital Gains Tax on Property in the UK

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Are you selling a property or considering property investment in the UK? Understanding Capital Gains Tax (CGT) is crucial for maximizing your profits and staying compliant with tax regulations. In this guide, we’ll walk you through everything you need to know about CGT on property transactions, from basic concepts to key considerations, all optimized to help you navigate this aspect of property ownership effectively.

What is Capital Gains Tax (CGT) on Property?

Capital Gains Tax is a tax on the profit you make when selling or disposing of a property that has increased in value since you acquired it. Whether you’re selling a second home, a rental property, or a buy-to-let investment, CGT applies to the gain made on the sale.

Calculating Capital Gains Tax

Calculating CGT involves determining the gain you’ve made from selling the property and applying the appropriate tax rates. The gain is generally the difference between the selling price and the property’s original purchase price, plus certain allowable costs and deductions.

Key Factors Impacting CGT on Property

  • Principal Private Residence Relief (PPR): If the property has been your main residence, you may be eligible for PPR relief, reducing or eliminating CGT.
  • Letting Relief: This relief applies if you’ve let out a property that was once your main residence, potentially reducing your CGT liability.
  • Annual Exemption: Each individual is entitled to an annual tax-free allowance on capital gains (£12,300 for the tax year 2024/25).
  • Transfers Between Spouses: Transfers of assets between spouses or civil partners are usually exempt from CGT, providing opportunities for tax planning.

Tax Planning Strategies for CGT

Effective tax planning can help minimize CGT liabilities. Timing the sale, utilizing exemptions and reliefs, and considering other tax-efficient strategies are crucial. Working with a qualified accountant can ensure you make informed decisions aligned with your financial goals.

Expert Assistance for CGT on Property

At Alliance Group London, we can advise on property tax matters, including Capital Gains Tax. We can provide advice and assistance to help you optimize your tax position and maximize returns from property transactions. Contact us today to discuss how we can support you with your CGT obligations and property tax planning needs.

Understanding Capital Gains Tax on property is essential for property owners and investors to make informed decisions and minimize tax liabilities. With our expert guidance and support, you can navigate CGT complexities confidently and ensure compliance with HMRC regulations.

Are you paying too much tax due to a wrong tax code?

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‘I got back £4,300 just by checking my tax code was right’ – HMRC repaid a woman thousands after she discovered she was taxed as if she received child benefit.

The above was a story in the guardian ( ‘I got back £4,300 just by checking my tax code was right’ | Tax | The Guardian ) that rings true for a lot of people.

People will often end up on the wrong tax code as incorrect information has been passed to HMRC somewhere along the line.

For example – your old employer doesn’t report that you have left their employment, HMRC starts to think you have 2 jobs.

Perhaps you applied for Marriage Allowance year ago and HMRC still believes you want it applied.

Getting your tax code corrected just involves a call to HMRC, so is relatively simple to fix.

If you are having trouble with your tax code, give Sharon a call on 0203 151 2354.

AllianceCA – helping you keep more of your money

Tax breaks on electric cars

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Want to find out more about the tax breaks on electric cars ?

Want to buy a car through the business?

Good news 100% First Year Allowances (FYA) for business cars and zero-emission goods will be extended from April 2021 until April 2025 . The measure had been omitted from Finance Act 2020.

What does this mean? If you want to buy a new electric Tesla ( Fleet and Company | Tesla United Kingdom ) for £60,000, the entire cost of the Tesla will reduce your business’ taxable profits by £60,000, saving corporation tax at 19%, this means a tax saving of £11,400.

This Xmas, get yourself a Tesla (thanks to us).

Call Sharon on get in touch here London Accountant | Chartered Accountant London | AllianceCA

 

#HMRC #Tesla #Capitalallowances

PPE for staff – tax impact

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PPE for staff – tax impact

Good news for employers and employees.

HMRC have advised that if an employer provides employees working in COVID-19 high-risk environments with PPE and coronavirus tests, then these will not been seen as a taxable “Benefit In Kind”. This follows HSE guidance that employers should provide PPE to employees where there is a risk to safety. 

Despite issuing guidance to the contrary earlier this week, HMRC have now confirmed that Coronavirus tests provided by the government as part of its national testing scheme will not be a Benefit In Kind (BIK) for tax purposes and no Income Tax (for the emmployees) or Class 1A NICs (for the employers) will be due.

Equally where employers provide testing kits to employees outside of the national testing scheme, whether directly or by purchasing tests to be carried out by a third party, there will also be no BIK. Where employees are working in a situation where the risk of Coronavirus transmission is very high and the employer risk assessment shows that PPE is required, the employer must provide PPE to employees and this will be non-taxable.

We think this is great news, and a welcome relief to businesses and employees who are already struggling under Covid 19.

Want to know more – get in touch and drop an email to sharon@allianceca.co.uk

#HMRC #BIKs #AllianceCA #Non Taxable #Coronavirus Testing

Gig workers legal challenge to Covid 19 support from government

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It has been a tough time for gig workers and those who started in self employment after April 19. ⁠ ⁠

In a recent legal case, Ahmed Adiatu & Independent Workers Union of Great Britain (IWGB) v HMRC, an Uber driver and his union made an unsuccessful claim for a judicial review of the government’s COVID-19 support measures for lower-paid workers.⁠ ⁠

Some of their key points were:⁠ ⁠

1. As a worker, an Uber driver has some similar rights to employees but as they are not subject to PAYE and they are unable to be paid under the Coronavirus Job Retention Scheme (‘JRS’).⁠ ⁠

2. The Self Employed Income Support Scheme (SEISS) is not available to workers who have moved from employment to self-employment since April 2019. ⁠ ⁠

The court said, ‘Standing back, there was an almost infinite range of measures that the government might have introduced to cope with the pandemic. The aims of the measures under challenge were legitimate since they were rational and were all directed towards providing assistance to employers and employees in response to the crisis, and the means adopted were appropriate to achieve the aims that were selected.”⁠ ⁠

The claimants’ challenges were all rejected.⁠ ⁠

Fingers crossed things get back to normal soon so that people can get back to making a living. ⁠

 #gigeconcomy #HMRC #tax #accountants⁠