Property
(CGT)

Capital Gains Tax (CGT) is a tax on the profit you make when you sell an asset that has increased in value since you bought it. For example, if you buy a share for £10 and sell it for £15, you have made a capital gain of £5.

You only have to pay CGT if the gain is more than your annual CGT allowance. The annual allowance for 2022/23 is £12,300. This means that if you sell an asset for a profit of less than £12,300, you do not have to pay any CGT.

No, inheritance does not go through HMRC. When someone dies, their assets are passed on to their beneficiaries. If the value of the assets is above a certain threshold, inheritance tax may be owed. The executor of the estate is responsible for paying any inheritance tax that is due. The executor is the person who is appointed to carry out the wishes of the deceased.

HMRC is the UK’s tax authority. They collect taxes from individuals and businesses. HMRC does not have any involvement in the process of inheritance.

You don’t have to inform HMRC if you inherit money in the UK, but there are a few things you should be aware of:

• Inheritance Tax. If the value of the inheritance is above the inheritance tax threshold, you may have to pay inheritance tax. The inheritance tax threshold for 2022/23 is £325,000.
• Income Tax. If you receive income from the inheritance, such as interest or dividends, you may have to pay income tax on that income.
• Capital Gains Tax. If you sell the inheritance and make a profit, you may have to pay capital gains tax on that profit.

Speak to one of our tax advisers if you’re unsure whether you have to pay any tax on your inheritance

Rates depend on your income tax band and the type of asset you’re selling.

• For basic rate taxpayers, the CGT rate is 10% on gains up to £12,300 and 20% on gains above £12,300.
• For higher-rate taxpayers, the CGT rate is 18% on gains up to £12,300 and 28% on gains above £12,300.
• For additional rate taxpayers, the CGT rate is 28% on all gains.

If you own a property jointly with someone else, you may have to pay CGT when you sell it. The amount you’ll have to pay depends on how much the property has increased in value since you bought it. You can usually deduct up to £12,300 from the gain before you must pay any tax.

If you have lived in the property as your main home at some point during the ownership period, you may be able to claim Private Residence Relief. This could reduce the amount of CGT you have to pay.

Speak to one of our tax advisors for more information.

To avoid CGT on an inherited house in the UK, you must live in it for at least 3 out of 4 years before you sell it. If you live in it for less than 3 years, you may still be able to claim some relief, but the amount of relief will be reduced.

For example, if you live in the house for 2 years, you can claim relief on half of the capital gains. If you live in the house for 1 year, you can claim relief on one-quarter of the capital gains.
Simply speak to one of our tax advisors if you’re unsure whether you qualify for relief.

Yes, there are two ways to avoid CGT on inherited property in the UK:

• Live in the property. If you move into the property and live there as your main home for at least part of the time between the date you inherit it and the date you sell it, you may not have to pay capital gains tax on any profit you make when you sell it.
• Sell it straight away. If you sell the property straight away, you won’t have made any profit, so you won’t have to pay any tax.

Speak to one of our tax advisors if you’re unsure whether you’re eligible for either of these options.