CGT on rental property

slopemaster

Considering selling our rental property, and trying to estimate how much CGT is due. We are both basic rate tax payers and the gain from the property will take us into higher rate, so the amount of tax we pay will depend on income for that year – it does vary year to year. I presume the relevant income is for the tax year in which you sell the property (not the previous one), as I cannot find any mention of this.

Is this correct? So, if the house is sold on 6th April 2023, it is income for 2023-24 that counts?

But, I believe CGT has to be reported and paid within 2 months, so how will it be worked out in that case? Do we/HMRC (which?) estimate our income, and then correct it at the end of the tax year?

Thanks in advance for any advice.

[Deleted User]

All that you have said is pretty much on the mark. On the final point - you do indeed have to declare and pay the tax within 60 days and the amount payable will be a best estimate . In addition you each will be required to prepare a self-assessment tax return, declaring  all income and gains,  where the final liability for the relevant tax year will be established.

Jeremy535897

Just to amplify a couple of points. The sale for capital gains tax purposes is the date unconditional contracts are exchanged, although nowadays that is often the same date as completion. If you exchanged unconditional contracts on 4 April 2023, the relevant tax year is 2022/23, and your other income for that tax year would be relevant in working out the rates of tax. You have to file online and pay your estimate of the tax due within 60 days of completion. Don't underestimate the tax due as there would be interest to pay on any underpayment. 

Bigwheels1111

I sold my rental property December 2020.
Had for 20 years rented for 11.
I had only 30 days to pay capital gains.
I was lucky I think, no income that year.
only cost 11k for capital gains.
House tripled in value.

Jeremy535897

Bit odd to have no income if you rented it out for 9 months, but presumably you mean no income tax due to personal allowance.