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Selling A UK Rental Property

What's your tax going to be?



I have recently been approached by several potential clients who are looking at selling a rental property and want to know what their Capital Gains Tax position is ...

If you're selling a UK rental property, there are different tax reliefs you could apply!

If you're selling a UK rental property, there are different tax reliefs you could apply!

copyright: sondem / 123rf stock photo

So I've put this blog post together as a brief reminder of the factors to consider when considering such a sale:

  • Allowable expenses

    The easiest way to reduce a Capital Gains Tax liability is to ensure that relief is claimed for all costs of buying and selling the property together with the cost of any capital improvements.

  • Principal Private Residence Relief

    If a property has been an individual's only or main residence during the period of ownership, Principal Private Residence (PPR) Relief should be available. PPR relief exempts that proportion of the gain that relates to the period in which it was the individual's main residence. Where PPR relief is available, the last 18 months of ownership are automatically exempt.

  • Letting Relief

    In addition, where a property has been an individual's principal residence, Letting Relief is available to exempt all or a proportion of the gain that is attributed to the period in which the property was let out.

    The amount of the relief is restricted to the lower of:

    • The gain attributable to the period in which the property was let out

    • The amount of the PPR relief

    • Or £40,000

  • Non UK residence

    Since April 2015, non-UK residents are subject to Capital Gains Tax when they dispose of residential property in the UK. Non-residents are subject to Non-Resident Capital Gains Tax (NRCGT).

    NRCGT differs from CGT as follows:

    • Only the gain arising since April 2015 is subject to NRCGT;

    • A NRCGT return must be filed within 30 days of the sale even if there is no tax to pay or has been sold at a loss. The tax should also be paid within 30 days unless you are already registered for Self-Assessment, in which case the tax can be paid on the normal due date.

      Care should be taken where the property is disposed of during a period of temporary non-residence in the UK. That is to say that the individual returns to the UK before spending 5 complete tax years as a non-UK resident. Where that is the case any gain not subject to the NRCGT will become subject to CGT in the tax year of return.

  • Annual Tax on Enveloped Dwellings (ATED)

    Finally, companies holding UK residential property that is subject to the ATED regime may be subject to ATED CGT at a rate of 28%.

The above is only intended as a brief summary and does not cover the tax position if you are a developer. Remember to always take professional advice before making financial decisions.

"Would you like to know more?"

If you are considering selling a UK residential property and would like to talk about your tax position, please call me on 01908 774323 or click here to ping over an email and let's see how I can help you.

Until next time ...


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More about Helen Beaumont ...

Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.