Capital Gains Tax Advice for Yorkshire Individuals and Businesses

CGT Planning That Starts Before the Disposal

Capital Gains Tax (CGT) is charged on the profit made when you sell, give away or otherwise dispose of an asset that has increased in value. It applies to a wide range of assets — residential and commercial property, business shares, investments, land and certain personal possessions — and the rates and rules that apply depend on the type of asset, your income tax position, and whether any reliefs are available.

The most important point about CGT is timing. Many CGT planning opportunities must be acted on before a disposal takes place, not after. Once an asset has been sold, the options for reducing the tax are significantly limited. We advise individuals and businesses across Yorkshire on CGT planning, compliance and reporting — from straightforward second property sales to complex business disposals and multi-asset planning.

Following changes to CGT rates in the October 2024 Budget, proactive planning is more important than it has been for many years.

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CGT Planning That Starts Before the Disposal

Planning a disposal? Get CGT advice before you complete.

Why Clients Come to Us for CGT Advice

CGT situations come to us in a variety of contexts. Common triggers include:

Selling a buy-to-let or second property and needing to understand the CGT due and the 60-day reporting and payment deadline
Selling a business or shares in a company and wanting to understand BADR eligibility and the tax position before contracts are exchanged
Planning to give assets to children or other family members and needing to understand the CGT and IHT implications of the gift
Selling an investment portfolio or significant shareholding and wanting to plan the timing and use of allowances to minimise the overall tax
Receiving shares or options through an employee share scheme and needing to understand when CGT arises and how it is calculated
Selling commercial property or development land and needing advice on rollover relief or other available reliefs
Dealing with the estate of a deceased person and needing to understand the CGT position on assets that are to be sold or transferred
An HMRC enquiry into a previously reported or unreported gain

The earlier in the process we are involved, the more options are typically available.

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CGT Planning Before Disposal

The most valuable CGT advice happens before the disposal, not after. Pre-disposal planning can include: timing the disposal to use the annual exempt amount in the most efficient tax year; spreading disposals across tax years where there are multiple assets; transferring assets between spouses or civil partners before disposal to use both annual exempt amounts and potentially a lower rate; considering whether any available reliefs apply and how to structure the disposal to preserve them; and planning the interaction with income tax — particularly for gains that are close to the higher rate threshold.

We advise on all of these as part of CGT planning work. The key is to have the conversation before contracts are exchanged, not after.

Property CGT — Including the 60-Day Reporting Rule

CGT on residential property — including buy-to-let properties, second homes and inherited residential property — must be reported and paid within 60 days of completion of the sale. This applies even if you file a self-assessment tax return. Missing the 60-day deadline results in automatic penalties and interest.

The 60-day deadline is one of the most commonly missed CGT obligations in the UK. Many people are unaware of it, or assume it will be dealt with through their annual self-assessment return. It will not — it must be reported separately via HMRC’s online service.

Key CGT reliefs relevant to property include:

Private Residence Relief (PRR) — exempts the gain on your main home from CGT. The relief applies for the period the property was your main residence, plus the final nine months of ownership in all cases (extended to 36 months in certain circumstances). If a property has been both your main home and let, PRR applies to the proportion of the gain attributable to the period of main residence
Letting relief — previously available to landlords who had at some point lived in the property as their main home. Since April 2020, letting relief is only available where the owner is in shared occupancy with the tenant — it is no longer widely available
Principal Private Residence election — where you own more than one property, you can elect which is your main residence for PPR purposes. The election must be made within two years of acquiring a second property. This is a time-sensitive planning opportunity that is frequently missed

We advise on property CGT, prepare the 60-day return where required, and review the PRR position for properties that have had mixed use as a home and as a let.

Business Asset Disposal Relief (BADR)

Business Asset Disposal Relief reduces the CGT rate on qualifying business disposals up to a lifetime limit. For current BADR rates and the lifetime limit visit gov.uk/entrepreneurs-relief or speak to our tax team.

BADR is available on disposals of:

Shares in a personal company — where the individual has held at least 5% of the ordinary share capital and voting rights, and has been an officer or employee of the company, for at least two years ending on the date of disposal (or the date the company ceased trading)
The whole or part of a business — for sole traders and partnerships disposing of all or part of a business that has been owned and actively carried on for at least two years
Assets used in a business — where assets are sold following the cessation of a business, provided the business was carried on for at least two years and the asset was used in the business throughout

The qualifying conditions need to be met at the date of disposal. There are circumstances where BADR can be inadvertently lost — for example, through dilution of shareholding below 5% in a funding round, or through the issue of new share classes that affect the voting rights test. We check BADR eligibility carefully as a standard part of pre-sale planning and advise on any steps needed to preserve it.

Key CGT reliefs relevant to property include:

Investment and Share Disposal CGT

CGT on the disposal of shares, investment portfolios and other financial assets is calculated on the gain since acquisition, after deducting allowable costs. Key planning points include: using the annual exempt amount each year (for the current figure visit gov.uk/capital-gains-tax); bed-and-spouse or bed-and-ISA transactions to reset base costs; loss harvesting to offset gains; and the timing of disposals relative to the tax year end.

For individuals holding shares in their employer or former employer, the CGT position often overlaps with employment-related securities rules and potentially Enterprise Management Incentives (EMI) or other share scheme arrangements, each of which has its own tax treatment. We advise on the full CGT position for share disposals, taking into account all of these factors.

The share matching rules — which determine which shares are treated as disposed of where a portfolio has been built up over time — need to be applied correctly to calculate the gain accurately. We prepare the calculation and report it correctly on the self-assessment return.

Gift Holdover Relief

Gift holdover relief allows the gain on a gift of certain assets to be deferred — the donor does not pay CGT immediately, but the gain is effectively passed to the recipient, who takes on the asset at the donor’s base cost. The recipient then pays CGT on the full gain (including the deferred gain) when they eventually dispose of the asset.

Holdover relief is available on gifts of business assets (including shares in trading companies), on gifts of assets that would qualify for inheritance tax business property relief, and on gifts into and out of certain trusts. It is not available on gifts of investment properties or other non-business assets to individuals.

Holdover relief interacts with IHT gifting strategies and the two need to be considered together — what is efficient for CGT purposes is not always efficient for IHT, and vice versa.

Rollover Relief

Business asset rollover relief allows a business to defer the CGT on the sale of a qualifying business asset by reinvesting the proceeds in a replacement asset. The gain is rolled into the base cost of the new asset and is only triggered when the replacement asset is eventually sold (unless rollover relief is claimed again).

Rollover relief applies to assets used in a trade, including land and buildings, fixed plant and machinery. The replacement asset must be purchased within one year before and three years after the disposal of the old asset. We advise on rollover relief eligibility and the timing of replacements to ensure the relief is properly claimed.

CGT and Inheritance Tax — The Interaction

CGT and IHT interact in ways that are frequently misunderstood, and planning one without considering the other can lead to poor outcomes. Key interaction points include:

Gifts to individuals — a gift is a disposal for CGT purposes at market value, even though no money changes hands. If holdover relief is not available, CGT is due. The gift may also be a potentially exempt transfer for IHT, starting the seven-year clock. The tax implications of the gift need to be assessed for both taxes simultaneously
Death — assets passing on death are exempt from CGT — the recipient takes the asset at the probate value (market value at date of death) as their base cost. This means unrealised gains are wiped out on death. However, the estate may be subject to IHT on those same assets. For assets with large unrealised gains, holding until death can eliminate the CGT but may increase IHT
Business assets — assets qualifying for Business Property Relief (BPR) or Agricultural Property Relief (APR) may be exempt from IHT. But these same assets may also attract holdover or rollover relief for CGT, and BADR on disposal. The interaction of all three needs to be considered in business succession planning

We advise on CGT and IHT together where the two interact — which is in most gifting, succession and estate planning situations.

How do I report capital gains to HMRC?

Gains on UK residential property must be reported via HMRC’s online Capital Gains Tax service within 60 days of completion, with the tax paid at that point. All other capital gains are reported on your annual self-assessment tax return, with the tax due by 31 January following the end of the tax year. We prepare CGT calculations, complete 60-day returns where required, and report all gains correctly on the self-assessment return.

What is gift holdover relief?

Gift holdover relief allows the CGT on a gift of certain qualifying assets to be deferred. Rather than the donor paying CGT at the time of the gift, the gain is effectively passed to the recipient, who takes on the asset at the donor’s base cost. CGT is then triggered when the recipient eventually disposes of the asset. Holdover relief is available on gifts of qualifying business assets and assets attracting IHT Business Property Relief. It is not available on gifts of investment properties or most non-business assets to individuals.

Can I transfer assets to my spouse to reduce CGT?

Yes. Transfers between spouses and civil partners who are living together are made at no gain and no loss for CGT purposes. There is no immediate CGT charge on the transfer. This means an asset can be transferred to a spouse before disposal so that both annual exempt amounts are used and, where one spouse has lower income, the lower CGT rate may apply to their share of the gain. The transfer must reflect a genuine change in ownership.

What is Business Asset Disposal Relief and do I qualify?

Business Asset Disposal Relief reduces the CGT rate on qualifying business disposals up to a lifetime limit. To qualify on a share disposal, you must hold at least 5% of the ordinary share capital and voting rights and have been an officer or employee for at least two years ending on the date of disposal. The qualifying conditions need careful checking as dilution of shareholding, certain share restructuring and some corporate reorganisations can inadvertently affect eligibility. For current BADR rates visit gov.uk/entrepreneurs-relief or speak to our tax team.

Is my main home exempt from CGT?

The gain on the disposal of your main home is generally exempt from CGT under Private Residence Relief. However, Private Residence Relief does not always cover the full gain. If you have let the property, used part of it exclusively for business, or it has not been your main residence for the entire period of ownership, only part of the gain may be exempt. The final nine months of ownership are always treated as a period of main residence regardless of actual occupation.

Do I have to report a property sale to HMRC within 60 days?

Yes. Where you make a taxable gain on the disposal of UK residential property, including a buy-to-let, second home or inherited property, you must report the gain and pay the CGT due within 60 days of completion. This is reported separately via HMRC’s online Capital Gains Tax service and is not covered by your annual self-assessment return. Missing the deadline results in automatic penalties and interest.

What are the current CGT rates?

CGT rates depend on your level of taxable income and the type of asset disposed of. For current CGT rates and the annual exempt amount visit gov.uk/capital-gains-tax or speak to our tax team. We will confirm how current rates apply to your specific situation.

What Is Capital Gains Tax (CGT) and When Does It Apply?

Capital Gains Tax is charged on the profit you make when you sell, give away or otherwise dispose of an asset that has increased in value since you acquired it. It applies to most assets, including property other than your main home, shares and investments, business assets and land. It does not apply to the sale of your main home in most circumstances, ISA holdings, or most personal possessions below a certain value.