Chancellor Jeremy Hunt announced in his Autumn Statement in 2022 that the current Capital Gains Tax allowance of £12,300 is being halved to £6,000 from April 2023 and then cut again to £3,000 from April 2024. That could mean an increased tax bill for many property owners planning to sell in 2023.
What is Capital Gains Tax?
The UK Government describes Capital Gains Tax as a tax on the profit upon the sale of (or ‘disposal of’) something (an ‘asset’) that’s increased in value. So, if a painting was purchased for £5,000 and it was sold later for £25,000, the gain is £20,000 (£25,000 minus £5,000).
An asset in this case could be but isn’t limited to, things like personal possessions, a second home or shares that aren't within an ISA. Therefore, those who own or are planning to sell a second home, will be required to pay Capital Gains Tax.
A higher-rate taxpayer will pay 28% on any gains from residential property. Those on basic taxpayer rates will see the rate changes depending on the size of the gain; 18% on residential property if it’s within the basic income tax band (£37,700 for the 2021 to 2022 tax year) or 28% if it’s higher.
The rules are different for trustees and businesses and full details can be found on the UK Government website.
How does this specifically affect property owners?
If a homeowner purchased the property for £200,000 and sold it for £250,000, the ‘gain’ would be £50,000. That would mean the current taxable income for that property would be £37,700 (£50,000 minus £12,300 = £37,700) and £6,786 would be payable in CGT for a basic rate taxpayer. However, in the next tax year that taxable income for the same property would be £44,000 taking the CGT tax bill to £7,920.
In summary, anyone looking to sell a property in 2023 is advised to sell quickly and complete the sale before the end of the current tax year at the end of March 2023.
Getting a quick sale by auction
With completion times on the open market taking up to between four to six months and with the risk of fall-throughs at any point, an auction is the best method for securing a secure sale. Disposing of a property in an auction means sellers get a fixed completion set for only 56 days later. That means vendors selling in February, can hand over the keys and have the proceeds in their account before the end of March.
Auctions aren’t only limited to rundown properties or those in need of repair, all types of property can sell by auction including vacant or tenanted residential properties.
In a time of economic uncertainty, and with these tax changes hitting hard for those with multiple properties, now is a great time to consider getting a great price with a sale by auction. Visit our auction page here or contact your local office to find out more.
What is Capital Gains Tax?
The UK Government describes Capital Gains Tax as a tax on the profit upon the sale of (or ‘disposal of’) something (an ‘asset’) that’s increased in value. So, if a painting was purchased for £5,000 and it was sold later for £25,000, the gain is £20,000 (£25,000 minus £5,000).
An asset in this case could be but isn’t limited to, things like personal possessions, a second home or shares that aren't within an ISA. Therefore, those who own or are planning to sell a second home, will be required to pay Capital Gains Tax.
A higher-rate taxpayer will pay 28% on any gains from residential property. Those on basic taxpayer rates will see the rate changes depending on the size of the gain; 18% on residential property if it’s within the basic income tax band (£37,700 for the 2021 to 2022 tax year) or 28% if it’s higher.
The rules are different for trustees and businesses and full details can be found on the UK Government website.
How does this specifically affect property owners?
If a homeowner purchased the property for £200,000 and sold it for £250,000, the ‘gain’ would be £50,000. That would mean the current taxable income for that property would be £37,700 (£50,000 minus £12,300 = £37,700) and £6,786 would be payable in CGT for a basic rate taxpayer. However, in the next tax year that taxable income for the same property would be £44,000 taking the CGT tax bill to £7,920.
In summary, anyone looking to sell a property in 2023 is advised to sell quickly and complete the sale before the end of the current tax year at the end of March 2023.
Getting a quick sale by auction
With completion times on the open market taking up to between four to six months and with the risk of fall-throughs at any point, an auction is the best method for securing a secure sale. Disposing of a property in an auction means sellers get a fixed completion set for only 56 days later. That means vendors selling in February, can hand over the keys and have the proceeds in their account before the end of March.
Auctions aren’t only limited to rundown properties or those in need of repair, all types of property can sell by auction including vacant or tenanted residential properties.
In a time of economic uncertainty, and with these tax changes hitting hard for those with multiple properties, now is a great time to consider getting a great price with a sale by auction. Visit our auction page here or contact your local office to find out more.
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