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Plan and Pay Capital Gains Tax On Property, UK

Calculating taxes is most people’s Achilles Heel, but it need not be yours. We have detailed guides to calculating taxes as well as proven ways to avoid paying more. Let’s get started with Capital Gains Tax and how to plan and pay it. 


What is Capital Gains Tax?

Capital Gains Tax or CGT is the tax you have to pay when you sell an inherited property that has appreciated in value. This property is not your primary property. You may not need to pay this tax if you’re selling your primary home. 

The government of the UK allows you to deduct the amount you spend to repair and sell the house. This includes extensions, stamp duty, legal fees, and your real estate agent fees. It does not include your maintenance costs such as redecorating. 

In short, the CGT is calculated on the gains above all your allowances. 

How Is CGT charged?

CGT is charged at 18% for standard rate taxpayers and at 28% for higher taxpayers. However, if the house sold has made a bigger profit than the basic rate band, then the seller could have to pay Capital Gains Tax at 28%. This means that the rate you pay depends on the size of the gain and not whether you are a basic rate taxpayer. 

The prices of houses in the UK increased by 9.8% in 2021 which means more Capital Gains Tax for buy-to-let investors as well as for second home sellers. 

When Do You Pay Capital Gains Tax on the Inherited Property?

Any and all Capital Gains Tax on your UK property must be reported and paid to the UK government within 60 days of completion. 

Capital Gains Tax on Second Property

You have to pay CGT if you sell inherited residential properties that are not your main homes. If you inherited more than one home, make the more expensive one that will make more gain, your primary home and save on Capital Gains Tax at the time of selling. 

Married couples and civil partners can name only one home. Unmarried couples can each nominate a different home. 

Capital Gains Tax on Buy-to-Let Property

If your buy-to-let property has appreciated more than your CGT allowances then you’ll have to pay CGT on it. 

Even if this property is the only property you own, you’ll have to pay CGT on it if it appreciates more than your allowance. 

You are exempt from paying Capital Gain tax only on your primary residential home that you’re living in.

At this point calculating and paying CGT gets quite tricky. Every estate is different and no rule may apply the same. Consult a trusted estate planner to know if you can avoid paying Capital Gains Tax. It may be possible to avoid it altogether, even if it seems like you can’t. 

Capital Gains Tax on Inherited or Gifted Property

Even if you gift your property to your child, you’ll still have to pay Capital Gains Tax on it. This instance is the same as selling it. You will calculate the Capital Gains Tax on the current market value and work out your total gains. 

On the other hand, if you’re selling an inherited property without making it your primary house, you’ll still have to pay CGT on it depending on the gains you make. You will calculate the gains from the date you inherited the property till the date you sold it. 

If you give away your property to your spouse, civil partner, or charity, there’s no Capital Gains Tax to be paid. 

How To Pay Capital Gains Tax?

You’ll need to report your capital gains on your Self Assessment Tax Return, online. The Self Assessment tax return has dedicated pages for capital gains. If you submit your Capital Gains Tax on paper, you’ll find the pages on the government site. 


Capital Gains Tax is calculated at 18% or 28% on the profit you make when you sell your inherited property. You pay the amount thus calculated to the HMRC department of the UK government, within 60 days of completion. 

Even if you think paying Capital Gains Tax is very easy for you, it is possible that there are ways you can save more tax. Individuals who file and pay taxes may not have the in-depth knowledge that experienced professionals do. 

We have handled hundreds of tax accounts and can handle yours as well. We always ensure that you save the maximum tax. Contact us for a free consultation.


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