In general a UK-resident individual is liable to capital gains tax (CGT) on gains that arise on the disposal of any assets, wherever situated, with very limited exceptions. There are special rules, however, for individuals who are resident but not domiciled in the UK. There are also a number of reliefs, including one for private residences.
The government is currently consulting on extending CGT to overseas residents (whether individuals or companies) with effect from April 2015, but only in respect of UK residential property. There are likely to be changes to the private residence exemption as a result, and these may affect UK-resident individuals as well as overseas residents. For further details of these changes see our factsheet here.
Currently, where an individual disposes of a house which has been his only or main residence throughout his period of ownership, or throughout that period except for all or part of the last 18 months of ownership, the whole of the gain is exempt from CGT. If the house has been the individual’s only or main residence for only part of the period of ownership, a proportionate part of the gain is exempt from CGT, but various periods of absence are treated for this purpose as periods of residence. In addition, a house owned by an individual is treated as occupied by him as a residence during any time for which he resides in job-related living accommodation and intends in due course to occupy the house as his only or main residence. There is also a limited relief for periods when the property was let.
For further details please see our new factsheet.
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Private client tax
Capital gains tax: relief for private residences