Capital Gains Tax on Rental/Holiday Lets
If you own a property that you rent out, be it a flat or house or a holiday let, you may have to pay Capital Gains Tax (CGT) when you sell the property. The rules below relate to whether you are a UK resident; if you live abroad or have dual residency for tax purposes etc. then the rules are more complex; please contact us if you require more information on this area email@example.com
Deadline for payment
You must report and pay any CGT on most sales of UK property within 60 days of the sale. If the total value of the gain is less than the annual CGT exempt allowance of £6,000 (for the tax year 2023/24) was £12,300 for immediately preceding years no return is required unless you have sold other assets during the tax year in which case it will need to included on your normal SA (self-assessment return (or using a special form if you do not file a SA return.
Private Residence Relief
You do not pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply:
you have one home and you’ve lived in it as your main home for all the time you’ve owned it
you have not let part of it out - this does not include having a lodger
you have not used a part of your home exclusively for business purposes (using a room as a temporary or occasional office does not count as exclusive business use)
If all these apply you will automatically get a tax relief called Private Residence Relief and will have no tax to pay. If any of them apply, you may have some tax to pay.
Calculation of the gain
The gain is usually the difference between what you paid for your home and what you sold it for. Use the market value for the cost instead if:
it was a gift (there are different rules if it was to your spouse, civil partner or a charity)
you sold it for less than it was worth to help the buyer
you inherited the asset (and do not know the Inheritance Tax value)
you owned it before April 1982
Other costs can be included, such as estate agents fees, improvements to the property not already offset against rental income in your annual return for both sale and purchase of the property.