As property is sold, landlords may be liable to pay Capital Gains Tax (CGT) if the sale of the property means that the profits exceed the UK Government limits on what an individual can earn before taxation is due.
Recent figures from HMRC highlight a notable 20% increase in CGT payers during the 2021-22 fiscal year. Around 394,000 individuals encountered this tax, predominantly due to sales that yielded financial gains, such as those from a second property or investment assets.2
According to these statistics, the tax authority amassed a staggering £16.7 billion in CGT, representing a 15% growth from the previous record.
Over the last decade, there has been a significant increase in taxpayers liable for CGT. With tax-free allowances on the decline, this pattern is set to continue.2
While CGT covers profits from assets such as shares, secondary residences, and various other belongings, it isn’t solely the domain of the immensely wealthy. A striking 45% of the total CGT derived from gains exceeding £5 million. However, a substantial 214,000 individuals paid it on gains of less than £25,000.3