Personal Tax

Deferring the property gain ― individuals

Produced by Tolley
  • 04 Jan 2022 11:11

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Deferring the property gain ― individuals
  • Categorising the gain
  • Non-business assets
  • Business assets
  • Deferral reliefs for gains made on non-business assets
  • EIS reinvestment relief
  • Social enterprises hold-over relief
  • Hold-over relief
  • Deferral reliefs for gains made on business assets
  • Rollover relief
  • More...

Deferring the property gain ― individuals

There are various capital gains tax reliefs which an individual can utilise to defer the capital gain on a property disposal until a later time, thereby postponing the tax bill. These are discussed below.

Categorising the gain

The first step in deciding what deferral reliefs may be appropriate to the taxpayer’s situation is to decide whether the gain on property relates to the disposal of a business asset or a non-business asset. Where the taxpayer disposes of a business asset, a wider variety of reliefs are available.

Non-business assets

A property business is often not considered to be a trade as the properties are held for investment purposes. If the property business were a trade, the sale of property would be a sale of stock and would therefore be chargeable to income tax. Whether the letting of property can amount to a trade is a question of fact.

This is discussed in the Transactions in UK land ― individuals and Application of the badges of trade guidance notes.

On this basis, the sale of a property used for the purposes of letting is normally classed as a non-business asset.

Note that if the property has been used as the individual’s only or main residence at any point during the period of ownership, principal private residence (PPR) relief may be available to exempt all or part of the gain. See the Principal private residence relief ― basic principles guidance note.

Business assets

As far as land is concerned, generally the following can be

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