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Property
Capital Gains Tax - Periods of Absence
A main residence can in some cases continue to be exempt from capital gains tax even when it ceases to be a main residence, so long as no other main residence is held. This can happen during: Periods of absence not longer than three years ; Periods of absence where the owner worked overseas; Periods of absence not exceeding four years where the owner was forced for job-related reasons to find other accommodation.
The property in these examples must be occupied as a main residence both before and after the period/s of absence in order to be eligible.
How capital gains tax is calculated.
The amount of capital gains tax you pay depends on your overall income. Your net capital gain is arrived at by offsetting your losses (carried forward or current) against your gains for the tax year and deducting any relief allowed (indexation, taper relief and AEA). This figure is then added to your taxable income for the year and capital gains tax is levied at the following rates:-
- 10% on gains up to £2,090
- 20% on gains between £2,091 and £32,400
- 40% on gains above £32,401
Reporting capital gains or losses made during the tax year is done by filling out the capital gains tax forms which can be obtained from your local tax office. Bear in mind that any gains or losses must be reported in writing by 5 October of the following tax year, and remember to make use of all the capital gains tax advice you can get your hands on, as you could end up saving a whole lot of cash.
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