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Plan for CGT Rate on Residential Sales

Wed 14 September 2016

The 2016 Budget earlier in the year announced significant changes to the Capital Gains Tax regime for individuals, partnerships and trusts.

One of the major changes is a reduction in the rate of CGT from 28% to 20%. However, gains made from residential property will now incur an 8% surcharge, so that the effective rate for residential sales remains at 28%. 

The Government’s aim is to stimulate investment in business rather than buy to let property. Private Residence Relief still relieves the whole of any gain on an individual’s main dwelling, but the changes represent bad news for individuals with multiple properties who are considering disposal. From April 2019, tax due on gains will also be due within 30 days of the completion of a sale (rather than by the following January) and so vendors could also feel the pinch on cashflow.

A dwelling also includes property sold with the intention of future use, and therefore liability can arise for sites sold with planning consent where conversion works have commenced, eg barn conversions. It is important to undertake tax planning early, ideally in advance of pursuing a planning consent, to ensure assets are held in the most appropriate ownership.

Stags frequently work with accountants, solicitors and other professionals in providing valuations for strategic tax planning purposes.

For an informal discussion on how our valuation services may be of help please telephone 01392 439046 / or email professional@stags.co.uk for contact details of the nearest Stags Professional Services Department.

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