In the March 2016 Budget it was announced that the capital gains tax rates for individuals would be reduced. However this reduction would not apply to sales of residential property. However, private residence relief (of principal private residence relief) is still available as before.
Basic Rate Higher or
Taxpayer Rate Taxpayer
Rate on gains from residential property 18%
Rate on gains from other assets 10% 20%
Individuals are entitled to an annual tax-free allowance which is £11,100 for the year from 6 April 2016. It would seem that individuals selling shares in companies which own residential companies would be chargeable to capital gains tax at the lower rates shown above as there is no look through, meaning the individual is disposing of shares and not residential poperty.
Companies pay corporation tax on their gains at the corporation tax rate (which for the year from 1 April 2016 is 20%). Companies can claim indexation allowance to reduce the taxable gain whereas individuals cannot.
It is worth noting that if the shareholder does not require the funds or it is to be reinvested by the company the the tax rate has beeb capped at 20%.
Stamp duty payable on purchase of property
An additional 3% stamp duty land tax is payable for properties purchased on or after 1 April 2016. This is to apply to both individuals and limited companies. There are detailed rules for individuals and for purchases through limited companies.
The stamp duty surcharge will apply for resiential property and not commercial.
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