Huw and Aled have significant experience in assisting individuals with understanding, quantifying and reporting their capital gains tax liabilities to HMRC as a result of the sale of an asset.
Our expertise in this field spans a number of different asset classes, as follows:
UK residential property
When an individual sells a UK residential property, HMRC guidance stipulates that the disposal must be reported to HMRC within 60 days of the completion date of the property sale, with the capital gains tax payable within this same timeframe.
From our experience, a significant number of vendors are completely unaware of this short deadline to report capital gains tax to HMRC. A specific UK residential property capital gains tax return must be filed with HMRC, which can be in addition to their annual self assessment tax return.
We can assist with assessing and calculating the exact amount of capital gains tax arising from the property sale, registering the vendors with HMRC for the specific property capital gains tax returns and with the preparation and submission of the capital gains tax return to HMRC on behalf of our clients.
We also encourage those who are in the process of selling their residential property to engage with us before the exchange of sales contracts, in order to assess whether tax savings can be made before the sale, e.g. through transferring half of the property ownership to a spouse if the property is in a person’s sole name. Early engagement can potentially save thousands of pounds on their capital gains tax bills.
It is also very important to assess whether any capital gains tax relief is available, from claiming relief on the cost of major improvements to the property to claiming private residence relief if owners have spent any length of time residing in the property as their main residence.
We also advise clients regarding their eligibility to claim private residence relief if they have worked overseas for a period of time, as relief may still be available for the period spent living overseas, subject to certain criteria. The availability of this relief can save potentially tens of thousands of pounds of capital gains tax, and in some instances, clients have been able to extinguish their capital gains tax liabilities in full as a result of claiming this relief for the period when they lived overseas.
Residential property sales can arise in any number of scenarios and we have assisted:
- landlords with a significant property portfolio
- expats who initially retained their UK home and then decided to sell their UK assets once they settled overseas (see here for more details on our expat services).
- ‘accidental landlords’, i.e. those who may have inherited a property many years ago and consequently became a landlord and are now looking to sell
- family trusts, including life interest or ‘interest in possession’ trusts, discretionary trusts and will trusts, when trustees decide to sell a property held on trust (see here for more details on our capital gains tax services for Trusts).
Furnished holiday lets
The abolition of the 'furnished holiday let' tax reliefs from 6 April 2025 now means that for income tax and capital gains tax purposes, holiday lets are treated in the same way as tenanted properties.
Consequently, income tax relief on holiday let expenditure is restricted, whilst it is no longer possible to claim Business Asset Disposal Relief from the sale of a holiday let.
Please get in touch if you wish to understand how the abolition of the 'furnished holiday let' tax reliefs has affected your business.
Overseas residential property
UK residents who own residential properties overseas may have capital gains tax reporting requirements in the country where the property is located and in the UK.
If capital gains tax is paid overseas and is also payable in the UK, tax relief can be claimed against this ‘double taxation’ via a UK self assessment tax return. The tax paid overseas can then potentially be claimed as a credit against any UK capital gains tax liability, depending on the existence and nature of double taxation treaties between the UK and the overseas country.
Shares
Capital gains tax generally arises on the sale of shares when the difference between the sales proceeds and their initial cost, subject to certain reliefs, is greater than the individual’s tax-free annual allowance.
Owners of shares span from those who are actively managing their own investments to employees who have been granted shares by their employer as part of their remuneration package.
Share options, in particular, can be complex in nature and expertise is required to assess whether any sale of share options is liable to income tax or to capital gains tax.
We have also seen a remarkable rise in the number of individuals using websites and mobile apps to buy and sell stocks & shares online. Most use these apps as a hobby, leading to a small number of trades on a weekly basis.
Trading in stocks & shares, even on this small scale, can create personal tax liabilities.
Firstly, any dividends or interest payments need to be declared in a tax return and secondly, any 'profits' made by selling stocks & shares could be liable to capital gains tax.
Until recently, individuals had a tax-free capital gains tax allowance of £12,000, however this halved to £6,000 from 6 April 2023 and halved again to £3,000 from 6 April 2024. This has led to many more people having to file tax returns to declare gains made on these trading platforms.
Most of these platforms do not provide an annual statement showing the gains and losses made during the year, leaving it to the individual to calculate any potential taxable gains. This can catch people by surprise.
We can perform a detailed review of the asset, including before the prospective sale, to help clients understand the tax implications of the sale before it is completed, enabling them to budget for the resulting tax liability and to give them peace of mind before the sale is completed.
Cryptocurrency
Investors and individuals have turned to cryptocurrencies over recent years due to the headline grabbing investment returns of some cryptocurrencies.
This conceals the reality that the unit price of cryptocurrencies can be very volatile, more so than traditional investments such as stocks and shares.
There are numerous potential tax events associated with cryptocurrency investing and we can assist individuals in understanding their potential income tax and capital gains tax liability in what is a new and complex area of tax legislation.
See here for a detailed analysis of tax matters affecting cryptocurrency holders.
Disposal of inherited assets
When beneficiaries of an estate inherit assets, such as property or shares, and subsequently decide to sell their inherited assets, the beneficiaries may be liable to capital gains tax on the disposals.
Generally, capital gains tax is assessed on the difference between the value of the asset at the date of inheritance (usually the date of death of the deceased individual) and the total proceeds received from the sale of the asset.
As individual tax-free capital gains tax allowances are now very low, it is highly likely that such disposals will lead to capital gains over and above the tax-free amount.
Disposals of UK residential property will need to be declared by each individual beneficiary to HMRC via a capital gains tax return within 60 days of the completion date of the sale, with the associated tax also paid within the same timeframe.
Disposals of other assets will need to be disclosed via a self-assessment tax return for the individual beneficiary for that tax year.
