When investing in real estate, the aim is, of course, to make a profit. You can rent your property, use it as a business or sell it after a while. If you sell the property you bought in the UK for a higher value and make a profit, you must report the capital gains on your tax return. You also have a capital gain when you make a profit by selling investments such as stocks, bonds, land, and property. So what exactly is the capital gain tax in the UK? Let's see together.
Some assets are tax-exempt. Also, you don't have to pay capital gains tax if all your earnings in a year are below your tax-exempt allowance.
When you sell or dispose of the following assets (sale, gift, transfer, exchange, use for payment), you must pay capital gains tax on your earnings.
If you own jewelry, paintings, antiques, coins and stamps and item sets worth £6,000 or more (other than your car)
Properties that are not your main home
A very large main home, rented main home or main home used as a business
Shares not covered by ISA and PEP
If you earn a profit after selling a property, you pay 18% capital gain tax as a base rate taxpayer, or 28% if you pay a higher tax rate. Gains from the sale of other assets are charged 10% for basic rate taxpayers and 20% for higher rate taxpayers. You should only pay these rates for earnings that exceed your capital gains allowance.
The capital gains tax allowance in 2021-22 is £12,300, as in 2020-21.
This is the amount of profit you can make from an asset this tax year before any taxes are paid.
If someone else is a partner in your assets, both people can benefit from the discount.
If you are married or in a çivil partnership, you can transfer assets to each other without paying capital gains tax. However, if you transfer your assets to your partner and then sell them, you will pay tax on the gains you have earned during the time the asset was owned by you as a couple, not since the asset was passed to your partner.