How are gains from UK residential property taxed? What taxes do I need to think about for UK residential property?

This is a freeview summary of the various taxes that are relevant for owners of UK residential property with links to our guides. 

CGT: different ways of taxing UK residential property

  • A summary in table format the Capital Gains Tax charge on UK residential property for resident and non-UK resident individuals, companies, trusts and other entities

CGT: rates and residential property

  • From April 2016 CGT rates fell to 10% and 20% for individuals.
  • These lower rates will not apply to residential property gains which will continue to be taxed at 18% and 28%.

Non-resident CGT: UK property

  • Since 5 April 2015 non-resident individuals, trustees and companies are subject to tax on gains arising on the disposal of UK residential property. 
  • Property values are rebased so that only gains arising since 1 April 2015 for companies and 6 April 2015 for individuals are charged, although acquisition cost can be used if preferred. 
  • All transactions must be notified to HMRC within 60 days (30 days prior to 27 October 2021); notification is not required if there is no tax payable on the transaction. CGT must be paid by the same date. 
  • From 6 April 2019, CGT charge was extended to cover all direct and indirect disposals of UK property or land. 

Private Residence Relief (PRR)

De-enveloping property

  • A company may wish to transfer its residential property to its shareholders, this is known as ‘de-enveloping’.
  • There is no specific tax relief for de-enveloping: the result is that it needs to be carefully planned in order to mitigate tax charges.

Gardens: selling or developing
What are the tax consequences of selling my garden for development purposes? What if the owner develops the garden? 

Profits from dealing and developing UK land
A guide to the new rules which replace the old Transactions in Land provisions and extend UK taxation to all profits from trading in and developing UK land, regardless of residence.

UK residential property and returning expats: to sell or not to sell?
For expats owning UK residential property who are considering moving back to the UK, the decision of whether and when to sell their UK property can be a tricky one. Should you sell before or after? What are the CGT and IHT issues?

Stamp Duty Land Tax: Rate and Reliefs

From 1 April 2016 SDLT is charged at higher rates on the purchase of:

  • An additional dwelling by an individual 
  • A dwelling purchased by a company. 

See SDLT & Residential property (higher rate)

SDLT only applies to properties in England and Northern Ireland; the Land and Buildings Transaction Tax (LBTT) replaced SDLT for properties in Scotland from 1 April 2015. Wales introduced the Welsh Land Transaction Tax (LTT) in April 2018.

 

ATED related gains: UK residential property and non-natural persons

  • Annual Tax on Enveloped Dwellings (ATED) related gains are no longer subject to Capital Gains Tax after 5 April 2019, Corporation Tax must be considered on any such gains.
    • Companies were subject to Capital Gains Tax at 28% on ATED-related gains, rather than Corporation Tax.
    • Only those gains arising whilst a property is subject to the ATED annual charge were ATED-related gains.
    • Non-resident companies could be subject to ATED CGT and non-resident CGT on the same disposal; where this is the case ATED CGT takes precedence to avoid a double charge.


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