If you are considering selling a property that is subject to Capital Gains Tax, you have until the end of March 2023 to take advantage of the current exemption amount of £12,300.
In his Autumn Budget, Chancellor of the Exchequer, Jeremy Hunt announced that from April 2023, the Capital Gains Tax (CGT) annual exemption amount is going to be reduced to £6000, then reduced further to £3000 in 2024.
What is Capital Gains Tax?
Capital Gains Tax is the tax paid on any profit made when you sell an asset that has increased in value. The tax paid is only on the amount gained not the total sum of the sale.
Who Pays Capital Gains Tax?
According to the government website, an individual will pay Capital Gains Tax when they sell a property that’s not a ‘main home’ or on a ‘main home if you’ve let it out’, ‘used for business’ or is ‘very large’.
If you have inherited a property, you may still need to pay Capital Gains Tax.
Capital Gains Tax Rates
CGT rates are calculated on both the type of asset you are selling as well as the tax band the ‘gain’ would take you into.
For basic rate taxpayers, the CGT rate is either 10% or 18%. If you are a basic-rate taxpayer who is taken into the higher threshold by the gain, you will pay some Capital Gains Tax at both rates.
For higher or additional rate taxpayers, the rate is 20% or 28%.
Beating the Deadline
Capital Gains Tax is calculated from the date of exchange; therefore, vendors can enter a property into an auction up until 31st March and still benefit from the higher exemption rates. Auction House offers weekly national online auctions, providing ample opportunities to sell your property before this date.
Auction House UK Managing Director Jeremy Prior commented “The change to Capital Gains Tax allowance is another blow to the private rental sector where landlords are already under financial pressure with increased running costs and mortgage rates, as well as legislative changes such as those to EPC ratings.
Not only do these changes impact Landlords and Buy-to-Let Investors, but they could also impact homeowners and those who have inherited properties.
At Auction House, we are fortunate to be able to offer a service where properties can be listed and sold within a matter of weeks.
As properties exchange on the day of auction, our February and March auctions are your last opportunity to beat the deadline. We therefore encourage those considering selling a property subject to Capital Gains Tax to not delay.”
