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UK Capital Gains Tax

Capital Gains Tax is the tax which is payable when you make a financial gain (often referred to as ‘profit’) once an asset has been sold or disposed of.As is the case in most countries which levy capital gains tax, the UK CGT rules are complex and you should seek professional tax advice if you think you are likely to be liable to pay CGT.

Prior to the new CGT rules being established, there was no capital gains tax on residential property for foreign investors and British Expats.As a result of the new CGT, investing in the UK has become less attractive, but the tax rules are now more in line with the tax rules of other developed nations such as Australia and the United States.

The new rules came into effect on 6 April 2015 (i.e. the start of the 2016 UK tax year), and full details are provided at this link.

If you purchased a UK property prior to 6 April 2015, there are three ways to calculate your gain or loss.They are:

  • Using the market value at 5 April 2015;
  • By working out the gain over the whole period (the date the property was acquired to the date it was disposed of) and then working out what the gain since 5 April 2015 is as a proportion – known as time apportionment;
  • By working out the gain over the whole period.

Your tax adviser / tax return preparer will be able to advise you on which method works best for you.