Today, we’d like to share some important news about Capital Gains Tax (CGT) that could impact many of you, especially if you’re involved in the property market. We want to ensure that you are well-informed and ready to make the most of these changes.

Big News for Property Owners

In the latest Spring Budget for 2024, a significant announcement was made regarding the CGT on residential property gains. Previously, those of us dealing with property were facing a higher CGT rate and a rather tight deadline for reporting gains and paying the tax to HMRC. However, there’s a light at the end of the tunnel!

A Welcome Change

From 6 April 2024, the higher CGT rate on residential property gains will drop from 28% to 24%. This adjustment aims to bring some relief to property investors across the UK. However, it’s important to note that furnished holiday let owners might not feel the warmth of this change as much. With the upcoming abolition of certain reliefs from 6 April 2025, including rollover relief and business asset disposal relief (which currently reduces the CGT rate to a mere 10%), things might get a bit chilly.

The Fine Print

  • Tax Rates: For general gains, CGT kicks in at 10% up to the basic rate band limit (£37,700), after which it’s 20%. For residential property gains, the rates are a bit different. Currently, if your income and gains fall within the basic rate band, you’re taxed at 18%. But from next April, once you hit that threshold, your rate will be 24% instead of the previous 28%.
  • Reporting Your Gain: Sold a property recently? Remember, you’ve got 60 days from the sale’s completion to report the gain to HMRC. This rule applies whether you’ve sold your main residence (and potentially owe no tax due to reliefs) or another property that might not be covered as extensively by exemptions.

How to Report and Pay

You’ll need to report your gain online through your Capital Gains Tax on UK property account, accessible via your Government Gateway account. Make sure you have all the necessary details on hand, including dates of acquisition and sale, costs, and any applicable tax reliefs. For those who prefer paper, there’s an option, but it’s mainly for specific cases.

A Final Word

Paying your CGT correctly and on time is crucial, and with these changes, it’s essential to stay informed. Whether your sale completed in the 2023/24 tax year or will complete in 2024/25, the rate you’ll pay has shifted, and planning ahead could save you a significant amount.

If this all seems a bit daunting, don’t worry—that’s what we’re here for. At Jon Davies Accountants, we’re more than just number crunchers; we’re here to guide you through the complexities of tax planning and ensure you make the most of every opportunity.

Ready for a Chat?

Whether you’re pondering your next property venture or just have a question about CGT, we’re here to help. Contact Jon and the team for personalised advice tailored to your unique situation. Together, let’s navigate the financial landscape and steer your business towards success.

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Any questions?

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