Accounting and Taxation advice in Hexham, Northumberland

Capital Gains

Capital gains tax ‘main residence’ exemption

Your ‘sole or main residence’ is generally exempt from capital gains tax. If a house was your ‘sole or main residence’ for only part of your period of ownership, then a time-apportionment calculation is made. There has been a rule, dating back nearly fifty years, that the last three years of ownership qualify for exemption whether or not the owner was in residence for that period. This is designed to prevent a tax charge arising if, for example, the old house proves difficult to sell or the new one requires renovation before the owner can move in. This needs planning for.

Planning to Sell Your Business?

Make sure you qualify for Entrepreneurs’ Relief

  • Remember – it can apply to the sale of all or part of a business
  • Do you qualify?
    • Trading
    • Investments
    • Minimum 5% shareholding and director/employee
    • Particularly watch service companies and hybrids

As with many other taxes, careful planning and detailed practical knowledge of the legislation can minimise the tax payable.
Through pro-active Capital Gains Tax planning we have recently saved a client over £50,000 on the sale of agricultural property.

Let us help you maximise this relief.


Moving out

Most people never even think about tax when selling their main home, but there can be a capital gains tax liability, so watch out!
If you have a substantial home with a large garden or surrounding land, not necessarily all of the gain on the sale of the property will be tax free.
There is no restriction of the size of the actual building which can qualify for relief but all of the building must have been occupied as your main residence. So, in the case of a very large house, if the family occupy the main part but the west wing is left empty, only the proportion actually occupied will qualify. 

A property may be made up of more than one building, for example, where there are stables, outbuildings, a garage etc. In addition to the actual buildings, gardens and grounds can also qualify for relief to the extent that the total land area on which the buildings sit is either:-

  1. less than half a hectare -about 1.25 acres, or
  2. such larger area as may be appropriate to the property concerned.

HMRC are automatically notified of land transactions by the Stamp Duty Land Tax Office and are increasingly enquiring into sales involving more extensive gardens and grounds. If you are moving out and this could apply to you, please contact us to see how we can help you save tax.

You need to know what this is going to cost you.

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