The rules governing Capital Gains Tax and second homes changed in April. Here we explain this change to CGT, and what it means for second and additional home owners.
Capital Gains Tax doesn’t apply if you are selling your main residence, so if you’re simply selling your home you’ll have nothing to pay. If it is a second or additional home you are selling, then Capital Gains Tax (CGT) may be liable.
Everyone has an annual CGT allowance, which is currently set at £12,300. So if the gain you have made – that is, the difference in what you paid for the property and what you sold it for (the profit) – plus any other profit you have made from sale of capital doesn’t take you over this threshold, then again you have nothing to pay.
However, if you are liable to CGT, then there has been an important change in when this needs to be paid to HMRC. All CGT owing now has to be paid within 30 days of completion of the sale. This is a big difference from previously, when the payment did not need to be made until the end of the January after the tax year in which the gain arose.
As for how much you will pay, this depends on whether you are a higher rate or basic rate taxpayer. If you are a basic rate taxpayer, you will pay 18% on any gain you make on selling a second or additional property. If you are a higher or additional rate taxpayer, you will pay 28%.
To talk to our Swindon conveyancing team about Capital Gains Tax and second homes, as well as any legal advice around buying or selling property, please get in touch.
Our solicitor-led legal team specialise in conveyancing (buying and selling both for the commercial and domestic market), wills and probate.