Capital Gains Property Tax Calculator UK

Changes To Capital Gains Tax Payment For UK Property Sales

Capital Gains Tax Changes 2020 From the 6TH April – Earlier Payment Of CGT On Residential Property

These changes do not affect your entitlement to PPR (principal Private residence relief) on your home –the changes relate to the sale of any property you own other than your principal private residence (for example buy to let property and Holiday homes).

From 6th April 2020 if you sell residential property the Capital Gains Tax (CGT) Liability will be payable 30 days after the date of sale.
A return (in addition to the self- assessment tax return) is required to be filed with HMRC within 30 days of the sale along with the payment of Capital Gains Tax.
No returns are required for no gain/no loss disposals or where no tax is due.

How Is Capital Gains Calculated?

Capital gains tax is payable on the difference between sale proceeds and cost of an asset. Every taxpayer has an annual allowance for Capital Gains purposes of £12,300 (2020-21 tax year).

An example: 
Liam purchased a second property for £150,000 paying legal fees of £1000 and estate agents fees of £1500. Whilst Liam owned the property he made capital improvements to the property (new boiler, double glazing, extension, new roof etc.) costing £50,000.
Lim sold the property having never lived in it for £225,000 completing on 1 July 2020. Liam incurred legal fees of £2000 and estate agents fees of £1500.

The capital gain on the property sale is calculated as follows:

  • Sale proceeds 225,000
  • Less: Costs of sale
  • Legal and estate agents fees (2,500)
  • Net sale proceeds 222,500
  • Less: Cost of property (150,000)
  • Less: Improvements (40,000)
  • Less: Costs of purchase
  • Legal and estate agents (3,500)
  • Net Gain 29,000
  • Less: Annual allowance (12,300)
  • Net Gain subject to CGT 16,700

If Liam is a basic rate taxpayer the rate of CGT is 18% giving a liability of £3,006 (18% of £16,700).
A return and the payment would be made by 30 July 202.
Thus calculation would be made at the point of sale and the CGT paid 30 days after sale (30 July 2020)-this is called the” Amount Notionally due” and the payment made is a “Payment –on-account “ of CCT due.
This calculation and payment is made ignoring any other CGT disposals which are not subject to the rules. However, the calculation can take account of available Capital losses.
Liam would then complete his 2020/21 tax return by 31 January 2022 including on it all the CGT disposals in the tax year.

An example:
In September 2020 Liam sells some shares incurring a capital loss of £30,000 –Liam, therefore, has no Capital Gains liability for the 2020/21 tax year.
Liam cannot claim back the £3006 he paid in July 2020 until he files his 2020/21 tax return.

If you need help calculating your CGT liability and making the declaration on sale of your property please contact us on 01527 864 586 or e-mail us.