What are the tax implications for a property sale given changes in residency status?

Your residency status can significantly affect how Capital Gains Tax applies, especially if you've been a non-resident or if the property was your main home for only part of the ownership period. It's a complex area, and you should seek professional advice to understand your specific situation and ensure correct reporting.

Will proceeds from a share option sale be taxed in the current or next tax return?

Generally, the capital gain from a share option sale is realised when you sell the shares. This gain should be reported in the tax year in which the sale occurred. For example, if you sold shares in May 2026 (tax year 2026/27), you would report this on your Self-Assessment for the 2026/27 tax year, due by 31 January 2028.

Can you provide a detailed breakdown of the capital gains tax calculation, especially regarding different tax rates?

The calculation involves taking your sale proceeds, subtracting the original cost and any allowable expenses, to arrive at your gain. You then deduct your annual exempt amount (e.g., £3,000 for 2025/26 and 2026/27). The remaining taxable gain is then taxed at either 16%/20% for most assets or 18%/24% for residential property, depending on your total income for the year. Your accountant can confirm the specifics based on your income.

Should company sale information be included under capital gains on the tax return?

Yes, if you sell shares in a company you own, any profit you make above the original cost and allowable expenses is generally subject to Capital Gains Tax. This would be reported in the Capital Gains section of your Self-Assessment tax return. Specific reliefs, such as Business Asset Disposal Relief, might apply in certain circumstances, potentially reducing the tax rate.

Why have the Capital Gains Tax figures and rates changed in the latest tax return version?

Tax thresholds, rates, and allowances are often reviewed and can change from one tax year to the next as part of government fiscal policy. For instance, the CGT annual exempt amount has been reduced in recent years. HMRC updates its forms and guidance to reflect these changes, so it's crucial to use the correct figures for the relevant tax year you are reporting on.

Capital gains and property income on your Self-Assessment

Understanding Capital Gains Tax (CGT)

Capital Gains Tax (CGT) is a tax on the profit you make when you sell or 'dispose of' an asset that has increased in value. It's the gain you make, not the total amount of money you receive, that is taxed.

What assets are subject to CGT?

Many assets can be subject to CGT, including:

Most personal possessions worth £6,000 or more (excluding your car).
Shares that are not in an ISA.
Second homes or buy-to-let properties.
Business assets.
Inherited assets

Your main home is usually exempt from CGT under Private Residence Relief, provided you've lived in it as your only or main home for all the time you've owned it.

Calculating your capital gain

To calculate your gain, you'll generally need to:

Find the sale price: The amount you received when you sold the asset.
Subtract the original cost: What you paid for the asset.
Subtract allowable costs: These can include:

Costs of buying or selling (e.g., stamp duty, solicitor's fees, estate agent's fees).
Costs of improvements (e.g., an extension, not just repairs).
Valuation fees.

The result is your gain. If your total gains in a tax year are below the annual exempt amount, you won't usually have any CGT to pay. For the 2025/26 tax year, the annual exempt amount for CGT is £3,000 (per gov.uk). The figure for 2026/27 is expected to remain the same but always check the latest guidance.

CGT rates and reporting

The rate of CGT you pay depends on your income and the type of asset you've sold.

For residential property:
Basic rate taxpayers pay 18% on gains above the annual exempt amount.
Higher and additional rate taxpayers pay 24% on gains above the annual exempt amount.
For other assets (e.g., shares):
Basic rate taxpayers pay 16% on gains above the annual exempt amount.
Higher and additional rate taxpayers pay 20% on gains above the annual exempt amount.

You report capital gains in the Capital Gains section of your Self-Assessment tax return. For residential property sales, you must report and pay any CGT within 60 days of the completion date if the property was sold on or after 27 October 2021. This is done via a 'UK property disposal' return, separate from your main Self-Assessment.

Reporting Property Income

If you rent out property, you'll need to report this income on your Self-Assessment tax return. This applies whether you're a sole trader, in a partnership, or a limited company (though limited companies report via Corporation Tax).

What counts as property income?

Property income generally includes:

Rent from residential or commercial properties.
Income from furnished holiday lettings.
Income from land and property abroad.

Allowable expenses for landlords

You can deduct certain expenses from your rental income before calculating your taxable profit. These must be 'wholly and exclusively' for your rental business. Common allowable expenses include:

Agent's fees and management fees.
Legal fees for leases lasting less than a year, or for renewing a lease for less than 50 years.
Accountant's fees.
Maintenance and repairs (e.g., redecorating, fixing a broken window). Improvements (e.g., adding an extension) are generally not allowable as revenue expenses but may be deductible for CGT purposes later.
Insurance (landlord's policies).
Council Tax, utility bills, and ground rents (if paid by you).
Interest on property loans (restricted for residential properties). Since April 2020, landlords can no longer deduct all finance costs from their rental income. Instead, they receive a basic rate tax reduction (20%) on their finance costs.

You report your property income and expenses in the 'UK property' section of your Self-Assessment tax return. Keep accurate records of all income and expenses, as HMRC can ask to see these.

Common mistakes

Forgetting the 60-day rule for residential property CGT: Many landlords miss the separate 60-day reporting and payment deadline for residential property sales.
Confusing repairs with improvements: Only repairs are generally allowable against rental income. Improvements are capital expenditure.
Incorrectly deducting finance costs: For residential properties, finance costs are no longer fully deductible against rental income but receive a basic rate tax reduction.
Ignoring residency implications for CGT: If you've lived abroad or rented out your former main home, Private Residence Relief can be complex.

Frequently asked questions

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