capital, gains, tax

Posted by Admin - 13/06/2016


Capital Gains Tax refers to the gain made after selling, giving or exchanging an asset.

Capital Gains Tax is calculated through your tax return and is paid in your Self Assessment.  If you do not pay Capital Gains Tax you are likely to be subject to a penalty fine.  Within your tax return you must ensure you include calculations on the loss or gain of any assets.


When you sell or dispose of a property you must ensure that you work out the gain or loss.  The different types of property that are liable to Capital Gains Tax include: second homes, rental properties, business premises and land.  If the property has been used for business purposes you may be able to claim for additional Capital Gains Tax reliefs.

Types of Property Used for Business

  • Shops
  • Factories
  • Warehouses
  • A holiday letting in the European Economic Area
  • Farm Buildings
  • Agricultural land


Private Residence Relief

If you were to sell, give or exchange your home the likelihood is you will be entitled to Private Residence Relief.  You will not need to claim for this it will just ensure that you do not have to pay Capital Gains Tax in most cases.

Business Asset Roll-Over Relief

If your property is classed as a business asset (as previously mentioned) you may be entitled to have all or part of your gain suspended if you were to buy another asset for business use.

Gifts Hold-Over Relief

If you were you gift your asset your gain can be suspended until completion of the sale of the property.  The likelihood is the person you have gifted it to will have to pay Capital Gains Tax.

If the disposal of your property is more of a trade e.g. developing and improving buildings to sell at a profit you could be liable for Income Tax instead of Capital Gains Tax.

What to Report and What Not to Report

It is paramount that you declare to HMRC if you have any Capital Gains Tax to pay as if you sell, gift or exchange an asset you may make a capital gain or loss.

Some assets are irrelevant to Capital Gains Tax like private cars and your home.  If these are the type of assets you have sold, gifted or exchanged then you do not need to inform HMRC as you cannot claim for losses on assets which are not liable for this type of tax.

However, if the asset you have disposed of is liable then you will need to work out any capital gains or losses.  You can only deduct losses if you have ensured that are allowable and HMRC have been made aware of them.

For information on how to report a loss visit