Capital Gains Tax reliefs on property

If you sell, give away, exchange or otherwise dispose of property, such as a building, land or lease, certain tax reliefs can reduce your Capital Gains Tax bill. Your property must meet certain conditions to qualify for these reliefs. Some reliefs are given automatically, you can claim others in writing.

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Your own home - Private Residence Relief
Buy-to-let properties, second homes, business premises and land
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Your own home - Private Residence Relief

When you sell or dispose of your home you will usually be entitled to Private Residence Relief. You don't need to claim this, it is given automatically. This means that if it was your only or main home, you usually won’t have to pay any Capital Gains Tax.

Find out more about Capital Gains Tax relief on your own home

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Buy-to-let properties, second homes, business premises and land

If you sell or dispose of property and don't qualify for Private Residence Relief - for example if you sell a buy-to-let property, agricultural land, farm buildings or business premises - these are liable for Capital Gains Tax and you must work out the gain or loss.

There are different reliefs and rates of relief available depending on whether the property has been used for business purposes or not.

Property not used for business purposes

Some examples of property that are not usually business assets for Capital Gains Tax purposes are:

buy-to-let properties
properties bought as a second home
properties bought for children to live in

The only relief normally available on non-business properties is Taper Relief. It applies only to properties sold or disposed of before 6 April 2008. Taper Relief reduces your gain based on the length of time you've owned the property. There are two rates and you should use the non-business rate.

You don't need to claim Taper Relief, but you should show the Taper Relief amount when you complete your Self Assessment tax return. You may also need to provide details of how you've worked it out.

If you're trading in property - for example you're buying and improving houses to sell them at a profit - you may be liable to Income Tax not Capital Gains Tax.

Find out more about Income Tax

Find out how to work out Taper Relief

Property used for business purposes

Examples of property which may be used in a business include:

agricultural land
farm buildings
a shop
a factory or warehouse
a furnished holiday letting in the UK

If the property counts as a business asset the following reliefs may be available for Capital Gains Tax purposes:

Business Asset Roll-Over Relief - All or part of your gain may be postponed if you buy another property or certain other assets for business use.
Gift Hold-Over Relief - If you give away your property all or part of your gain may be postponed until the property is sold. In most cases the person you give it to will pay any Capital Gains Tax.
Entrepreneurs’ Relief - Your gain may be reduced by four-ninths for the first £1 million of gains. It only applies to sales or disposals on or after 6 April 2008.
Taper Relief - This reduces your gain. The reduction is based on the length of time you've owned the property and whether it qualifies as a business asset for Taper Relief. It only applies to properties sold or disposed of before 6 April 2008.

The conditions that must be met for your property to count as a business asset vary from relief to relief.