Understanding Capital Gains Tax (CGT) (UK) 

Thanks for watching!

Thanks!

Thanks for watching!

Thank you!

If you switch homes then you can notify HMRC which property is your primary residence through an election. Where a taxpayer lives in more than one property, they must inform HMRC as to which property is their main home. The homeowner must make a 'nomination' within two years of changing the property that they live in. Taxpayers that are married or in a civil partnership and own two or more homes between them must make a joint nomination and are only entitled to Private Residence Relief on one home between them.

I'd advise speaking to an accountant in relation to your query.

No, you generally don't have to do a tax return if your capital gains are below the allowance. However, there are some exceptions: * Selling property (except your main residence): You might need to report the sale even if your gain is below the allowance. * Losses: If you want to claim capital losses to offset future capital gains, you'll need to submit a tax return. * Registered for Self Assessment: If you're already registered for Self Assessment for other reasons (e.g., running a business), you might need to report your capital gains even if they're below the allowance. Here are some resources for more information: *GOV.UK - Capital gains tax: [www.gov.uk/capital-gains-tax/rates](www.gov.uk/capital-gains-tax/rates) * GOV.UK - Do you need to send a Self Assessment tax return?: [www.gov.uk/self-assessment-tax-returns](www.gov.uk/self-assessment-tax-returns) It's always best to consult with an accountant if you're unsure whether you need to file a tax return.

Thanks so much. Was it the only property you owned and did you live in it? If so there's no tax to pay. If it was an additional property to your main home then yes, the profit would be subject to CGT if the gain is over £12,300. The profit doesn't get added to your income as it's not subject to income tax.

@@Louise.Fitzgerald_IFA Thank you for your reply, nope I didn't live at the property

I'd recommend you speak with an accountant for clarification as this is a complex area. But the allowance doesn't get compounded. You're only entitled to the allowance in the year of the sale.

@@Louise.Fitzgerald_IFA Thank you so much for taking the time to reply.

Hi. I'd suggest speaking with an accountant about this as it's quite a complex area.

I would advise that you speak to an accountant about this.

No, just capital gains tax

If the profit is under the CGT allowance then you won't need to pay CGT.

If it's your main residence, and always has been there would be no CGT to pay.

Yes its £6k for 2023-24. And £3k for 2024-25. It is very unfortunate!

Here's a breakdown of CGT implications for your sole property that you rented out: Private Residence Relief (PRR): This relief is crucial when it comes to CGT on your sole property. Here's how it applies: * Full Relief: If your property was your only or main residence at some point during your ownership, you might qualify for full PRR, exempting any capital gain from CGT. * Partial Relief: Even if you rented it out for a while, PRR can still apply proportionally to the period you lived there. This reduces your overall taxable gain. There's no minimum occupancy period mandated for claiming PRR on a sole property. However, the amount of relief you receive depends on the proportion of time you lived in the property compared to the total ownership period. CGT Annual Exempt Amount: There is indeed an annual exempt amount for CGT that is due to be halved to £3,000 from April 2024 but this is yet to be confirmed. While the information above provides a general understanding, consulting a qualified accountant or tax adviser is recommended. They can assess your specific situation, including details like ownership timeline and rental periods, to determine the most accurate amount of PRR applicable and any potential CGT you might owe. I hope that helps!

You would need to declare it. CGT doesn't get deducted automatically.

@@Louise.Fitzgerald_IFA Thank you for your response

If it's your only property and you've lived in it the entire time you've owned it then there shouldn't be any CGT to pay when you sell it

As the 11k is under your capital gains allowance, you won't have to worry about reporting it. Thanks for watching!

This is a tricky situation, and the acquisition cost for CGT purposes depends on your specific circumstances and the type of asset. Here's a breakdown of the two possibilities: Scenario 1: Acquisition Cost at Purchase This is generally the more likely scenario. For most assets acquired as a non-resident and then disposed of while a UK resident, the acquisition cost for CGT purposes is the original purchase price you paid when you weren't a UK resident. This applies to assets like: Shares in companies listed on a recognised stock exchange. Most other investment assets. In some cases, residential property (depending on purchase date and disposal date). Scenario 2: Market Value When Becoming Resident (Less Likely) In some specific situations, the acquisition cost might be considered the market value on the date you became a UK resident. This is less common but can apply to some assets like: Unlisted shares (shares in private companies). Business assets. In some limited cases, residential property (especially for disposals after April 2015). It's important to note that the rules can be complex, and the best course of action is to consult with a qualified tax adviser or accountant. They can assess your specific situation, the type of asset, and the relevant tax rules to determine the most accurate acquisition cost for CGT purposes. I hope that helps!

Sadly inflation does not get taken into account. It may not be fair but sadly that is how the system works.

Thank you@@Louise.Fitzgerald_IFA

The £325k + £175k is for inheritance tax not CGT. If it was your son's primary residence when he sells it it shouldn't be liable for CGT. I would advise speaking to an accountant for clarification.

@@Louise.Fitzgerald_IFA Hi, thank you for the speedy reply. So am I right to say I don't have to pay cgt when I gift the house to my son? Can I simply write a letter to him to declare that I have gifted the house? Does it have to be written by a lawyer?

@@sssfff I would suggest speaking with both an accountant and a solicitor to ensure everything is water tight.

You're right, there's no immediate financial gain when you simply give an asset away. However, in the eyes of Capital Gains Tax (CGT), gifting an asset is considered a disposal event. Here's why: * Potential Future Gain: Even though you receive no money now, the recipient could potentially sell the asset in the future for a profit. HMRC wants to capture potential future gains associated with the asset you've owned. * Valuation Point: Gifting sets a new market value for the asset. This becomes the recipient's base cost for future CGT calculations if they ever sell. Here's how CGT applies to gifts: * The disposal value for CGT is considered the market value of the asset at the time of gifting. * You'll be liable for CGT on the difference between the asset's market value and your original acquisition cost (plus any allowable expenses). Exceptions to CGT on Gifts: There are some situations where you won't be liable for CGT on gifts: * Gifts to Spouse or Civil Partner: Transfers between spouses or civil partners are generally exempt from CGT. * Gifts to Charity: Donating assets to registered charities typically incurs no CGT. Remember: * You can utilise your annual CGT exemption allowance to offset some capital gains. * It's always best to consult with a qualified accountant for personalised advice on your specific situation.

Yes, you might have to pay Capital Gains Tax (CGT) on the profit you make when you sell your house if you rented it out for 3 years. CGT applies to the profit you make when you sell an asset, such as a house, that has increased in value. The profit is generally calculated as the difference between the selling price and the purchase price of the house. Since you rented out the property, you might qualify for some reliefs that can reduce your taxable gain: * Letting Relief: This relief reduces the gain you make by an amount proportional to the time you rented out the property. * Private Residence Relief: This relief applies to the portion of the gain relating to the time you lived in the house yourself. You also have an annual exempt amount, which is the amount of capital gain you can make in a tax year without paying CGT. For the 2023/24 tax year, this amount is £6,000. If the total profit after reliefs is above the annual exempt amount, you'll need to pay CGT on the remaining amount. The rate of CGT depends on your income tax band: * Basic rate taxpayers (income up to £50,270) pay 18%. * Higher rate taxpayers (income over £50,271) pay 28%. It's highly recommended to consult with a qualified accountant for personalised advice on your Capital Gains Tax situation. They can help you determine the reliefs you qualify for and calculate the exact amount of tax you might owe. I hope that helps!

Based on what you've described, you likely won't have to pay Capital Gains Tax (CGT) when you sell your property. Since this is your only property and you previously lived in it as your main residence, you'll most likely qualify for full Private Residence Relief (PRR) which exempts any capital gain from CGT. Here's how PRR applies in your situation: * Full Ownership: You mentioned you jointly purchased the property, so assuming joint ownership is still the case, both you and your partner would benefit from PRR. * Main Residence: You lived in the property as your main residence until 2020. * Letting Period: Even though you rented it out for the past 4 years, PRR can still apply to the entire ownership period for a sole or main residence. You also mentioned the property hasn't gained much equity. If there's no significant gain on the sale (selling price minus purchase price), there won't be any capital gain to tax even without PRR. While the situation suggests you likely won't owe CGT, consulting with a qualified accountant is always recommended. They can provide a more definitive assessment based on your specific circumstances and any additional details that might be relevant. This could include factors like improvement costs or specific dates of ownership changes. I hope that helps!

@@Louise.Fitzgerald_IFA thank you very much for your advice.

You're very welcome

Some providers may have one, perhaps Quilter or Prudential?

Absolutely! You can offset your capital gains with capital losses to reduce your tax burden. Here's how it works in your scenario: You made 10K profits on stocks. You have a 6K capital gains tax-free allowance. So, your taxable capital gain is 10K - 6K = 4K. Now, you also have 2K in capital losses. You can use these losses to offset your taxable gains. There are a couple of points to consider: * Order of deduction: Current year's capital losses are typically used first before offsetting with losses carried forward from previous years. * Unused losses: Any remaining losses after offsetting your gains can be carried forward to future tax years and used against future capital gains. It would be worth speaking to an accountant for further clarification.

They are separate allowances

Thanks for the reply! So say you have a full time job and fancy investing/ trading as long as your capital gains isn’t above the free allowance you essentially can trade up-to that allowance and not have to pay any tax each year?

Exactly right.

@@Louise.Fitzgerald_IFA thanks again for the info 😊

@@Louise.Fitzgerald_IFA I take it the same apples to crypto investments/ trading do you have any videos on that?

This can been seen as inapropiate disposal of assets (Tax avoidance) by HMRC and land you in a lot of trouble financially.

This is a very complex area and I would suggest seeking legal advice.

It's advisable to be upfront and honest with HMRC.

Sadly there is a distinct lack of financial education in UK schools which needs to be addressed

@@Louise.Fitzgerald_IFA thank you very much for your reply. Do you have any blogs or a Twitter I may follow? Kind regards, Ghost 👻

@@G-host0069 Sure. I'm on Instagram as your_ifa, Facebook as Louise Fitzgerald - IFA and Twitter as yourIFA.

@@Louise.Fitzgerald_IFA can you tell me how much you charge per meeting. I prefee face to face. I want advise on pension planning.

@@precociousdeathdealer202 the initial meeting is completely free of charge. If you'd like to book one, go to my Instagram profile and click on the link.

At the time of recording the information was correct, but it has indeed changed

I wouldn't suggest that...

You don't pay inheritance tax when you inherit an asset but if you later sell that asset you could have to pay CGT. I'd recommend speaking to an accountant for clarification.