The Chancellor's Autumn Statement, released at the end of last year, announced changes to CGT rules, some of which will take effect from 6 April 2014. It is therefore important to consider whether you should be looking at disposing or transferring property before April to minimise any CGT charge which may arise.
The annual allowance for CGT for 2013/14 is £10,900. If this has not been fully used this year and if you are thinking about selling (or transferring) a property which may gave rise to a tax charge, it is well worth giving some serious thought as to whether the property should be sold or transferred during this tax year to make full use of your annual allowance.
Principal Private Residence Relief
Where you have lived in a property as your sole or main residence at some point, the last 36 months of ownership currently qualify for relief from CGT as you are deemed to have occupied the property for that time, regardless of whether you have in reality.
This means that if you have lived in a property for the whole period of ownership apart from the last 3 years, there is no charge to CGT as principal private residence relief will be available for the period of actual occupation and the last 3 years of deemed occupation. This is about to change, however, and from 6 April 2014, the deemed occupation period will be reduced from 36 months to 18 months.
If you therefore have a second property which was once your home and you are thinking about selling, we would encourage you to speak with us as soon as possible, as the window for planning is short.
CGT changes for non-residents
Another change announced at the end of last year affects non-residents. Currently non UK residents selling a UK investment property are not subject to CGT on the profit realised by the sale. The Government has, however, announced plans to bring non UK residents within the UK tax net in terms of gains realised when disposing of a UK residential property. These changes are expected to take effect from April 2015 and more details are expected to be published in the coming months.