Our helpful calculator can help you estimate your Capital Gains Tax when you sell a UK property.
The top 10 Allowable expenses against rental income plus 32 more
If you're letting property see our list of the top 10 allowable property expenses and find out what the other 32 expenses are. Make sure you're claiming for all the allowable costs you're allowed.
Stamp Duty has become one of the most complex and misinterpreted taxes on property, so we've put together a list of the top 30 questions we get asked on this. If you're still struggling book a consulation with us and we'll provide you bespoke tax guidance on this tricky tax.
Limited Company v Personal Ownership. Which one is right for you?
It's one of the most common questions we get asked. The answer depends on a number of factors such as whether you're a higher rate or lower rate taxpayer, do you want to pass on property wealth to children, do you live in the UK or overseas, how many properties and level of rental income are you planning to invest in etc. Getting the right advice is crucial and could save you £000's. Get in touch to arrange a personal assessment of which option is right for you.
How a Deed of Trust can cut income tax for married couples by 50%
Many investors start out by buying rental property in joint names with their spouse. In such situations where one is a higher rate taxpayer and the other a lower rate taxpayer, the best outcome from a tax point of view is to have the rental income taxed on the lower earning spouse. By doing this the effective tax rate is kept at 20% and full tax relief can be obtained on mortgage interest payments. For more details on how this works please see the following:-
Property Family Investment Companies - (FIC) What are FIC's and how do they reduce your Inheritance Tax and help pass on your property wealth to the next generation
Set up correctly, a Family Investment Company can provide an effective way for a family to pass on wealth to the next generation. The main benefits are a substantial reduction in inheritance tax whilst allowing the founding generation. i.e. you as parents, to retain control over the company, the tax free return of any funds you place in the company and access to the rental profits if required. For more details see the following:-
The Let Property Campaign - A safe way for landlords who need to declare there rental income for previous years
The Let Property Campaign has been around for many years now and has been organised by HMRC in order to provide a long-standing disclosure opportunity for residential property landlords who need to update their tax affairs in order to avoid penalties and interest. For more details and how this works plesae see the following:-
The following calculator and commentary are provided solely for informational purposes. Please note that this information may not be current or complete and that it may only apply to certain types of residential properties in the UK. It does not constitute any form of advice.
UK Property Tax
Capital Gains Tax Calculator
Estimate your Capital Gains Tax when you sell a UK property
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Include stamp duty, legal and estate agent fees, and capital improvements such as an extension. Do not include mortgage interest, running costs or general repairs.
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This is your sale price minus your purchase price minus your costs above. It is before Private Residence Relief, the Annual Exempt Amount, or any other allowance.
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Co-owner holds the remaining 50%.
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This is your income after the Personal Allowance, not your total income. It decides how much of your gain is taxed at 18% rather than 24%.
months
months
Total Capital Gains Tax due
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60-day reporting deadline: if any Capital Gains Tax is due on a UK residential property, you must report the sale and pay the tax owed to HMRC within 60 days of completion, using HMRC's Capital Gains Tax on UK property service. This applies even if you also complete a Self Assessment tax return. Missing the deadline triggers an initial £100 penalty, with further daily and 6-month penalties plus interest if the delay continues. Non-UK residents must report every disposal within 60 days, even where no tax is due.
Private Residence Relief (simplified): this estimate assumes relief for the months you lived in the property as your main home, plus a further 9 months at the end of ownership (36 months if you were disabled or had moved into care). It does not allow for other periods of deemed occupation, such as time working away, letting relief, or business use of part of the property. If any of these apply, the relief due, and the tax owed, may differ from this estimate.
Please note: this calculator is designed for individuals selling a UK residential property such as a buy-to-let or second home. It does not cover limited companies, trusts, personal representatives of an estate, non-UK residents, or mixed business and residential use. Joint ownership figures assume the entered incomes belong to each named owner in their stated share. For joint owners, HMRC looks at the actual beneficial ownership share, not just what is on the title deeds, and any change to that split normally needs to be agreed and evidenced before the sale. Capital Gains Tax rates and allowances are the same across the whole of the UK, including Scotland and Wales, even though income tax bands differ between nations. This figure is an estimate only; for a full breakdown of how it was calculated, please speak to your adviser.
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Why are interest-only mortgages a common choice for buy-to-let properties?
To finance their investments, landlords typically choose interest-only Buy-to-Let mortgages because they are less expensive and are usually covered by rental income. Those with fixed-rate mortgage deals won’t see their rates change until their current offer expires, but those with tracked and variable rates may see their profits wiped out by their mortgage costs, which rise along with the base rate.
You may want to consider consolidation if you already have multiple buy-to-let mortgages as it may be possible to reduce the amount paid overall by consolidating multiple debts into one property loan. This is especially true if you have had a variety of interest rates on your previous loans. Your lending costs could be reduced as a result. You can discuss this in more detail with one of our specialist property accountants if you would like to find out what options are available to you.
What happens at the end of an interest-only buy-to-let mortgage?
The original amount borrowed by the borrower must be repaid in full when the interest-only mortgage expires. In this type of mortgage, interest is paid monthly and the total loan repayment is deferred until the end. In most cases, a lender will contact you at least a year prior to the end of your term to remind you of the deadline, then again at 6 months, and then once more as the closing date approaches. The lender can then issue you a redemption statement, which confirms the specific amount to be repaid.
How much is the deposit for a buy-to-let interest-only mortgage?
This can vary from lender to lender. Most lenders now require some form of deposit but the way they calculate how much they will lend is a factor of the rental income for the property and interest rates. Most BTL lenders operate on an interest cover formula. Typically they will require the rental income to cover anything from 125% to 140% of the interest payments.
If you have further questions feel free to talk to us about your landlord accountancy queries by getting in touch at 0800 907 8633, via tax@fixedfeetr.com or via our online contact form to speak to one of our specialist tax advisors.
UKLandlordTax.co.uk is the trading name of Thandi Nicholls Ltd Accountants Registered Office: Creative Industries Centre, Glaisher Drive, Wolverhampton WV10 9TG.
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