A Capital Gains Tax (CGT) return is a mandatory tax document in the UK that must be completed when you sell or dispose of an asset that has increased in value. It’s essential for calculating and reporting the amount of tax due on profits (capital gains) you’ve made above the annual tax-free allowance. This return helps determine the tax payable on gains from selling assets such as real estate (excluding your main home), shares or other valuable items.
When determining CGT liability, the basic method involves subtracting the cost from the sales price and then applying the current CGT rate. However, the process often extends beyond this simple calculation. Many crucial factors are frequently overlooked or misunderstood by clients attempting to handle their CGT calculations independently.
Yes, you can reduce your CGT by claiming reliefs such as Private Residence Relief, Lettings Relief and deducting allowable costs such as enhancement expenses and legal fees.
If you have reported capital losses in previous years, you can carry these forward and offset them against future capital gains to reduce your CGT liability.
Yes, all disposals of property should be reported. However, CGT is only payable on gains that exceed the annual exempt amount and certain disposals like your primary residence may be fully covered by reliefs.
UK residents must report and pay CGT within 30 days of completing the sale of a residential property.
You may be eligible for both Private Residence Relief and Lettings Relief, which can reduce your CGT liability.
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