In the recent budget, it was announced the government are reducing the threshold for Capital gains.

 

Landlords will be hit by this, if you are thinking of selling a property, but let’s see what it means.

 

 

Presently everyone who sells a capital asset has the first £12,300 exempt from paying anything. This is being reduced to £6,000 in 2023 and £3,000 from 2024.

 

Depending on which tax bracket you fall in to, the additional profit made will be taxed. If you are a 20% taxpayer, you will pay 18% on the profit. If you are a higher rate payer, 40% and above, you pay 28%.

 

EXAMPLE

If you purchased a property for £200,000 and sold it for £300,000. For simple terms, you have made £100,000 (there are other costs you can deduct).

 

Tax year2022/ 2023 – In the present tax year you would deduct the first £12,300 pay tax on the remaining £87,700.00. At 18% this would be £15,786.00 and at 28% this would be £24,556.

 

Tax Year 2023/2024 The additional amount to pay in 2023 due to threshold being lowered to £6,000 would be £1,134 at 18% and £1764 at 28%.

 

Tax year 2024/2025 Then an additional amount in 2024 due to the threshold being lowered to £3,000 would be  £540 at 18% and £840 at 28%.

 

If we tried to look at the glass half full aspect, they did not match the tax to pay to your earnings tax!

 

Don’t get frazzled by all the red tape, let Move On take the stress away from you!

 

Fancy an informal chat any time, then email me sharon@moveon.biz with your phone number.

 

Sharon