Capital Gains Tax Changes And Their Impact On Landlords

The Cedar Crest Team
Jul 21
3 min read

Starting on 6th April 2025, significant changes to Capital Gains Tax (CGT) rules in the UK are anticipated to transform the landscape for landlords with investment property portfolios. These adjustments could have far-reaching implications, encouraging property owners to reconsider their financial strategies. The primary change concerns the extended CGT payment deadline for property sales.

Currently, landlords are required to report and pay CGT within 60 days of completing a property sale. However, under the revised rules, the deadline will align with self-assessment tax returns. This means that gains from disposals made during the 2025/26 tax year will not need to be reported or paid until 31 January 2027.

PAYMENT WINDOW ADJUSTMENTS FOR LANDLORDS

For those managing buy-to-let properties, aligning with the self-assessment timeline creates an opportunity. It allows for additional time to budget for their CGT liabilities, particularly in years when multiple properties may be sold. While this extension offers greater flexibility, it also emphasises the ongoing importance of accurate record-keeping and financial planning to prevent sudden cash flow strains.

For instance, imagine a landlord selling a rental property in July 2025. Under the current system, the CGT payment would be due by September 2025. After 6 April 2025, this payment could be postponed, allowing the landlord to address it alongside their broader tax obligations by 31 January 2027. While this provides some breathing room, it also emphasises the importance of long-term financial discipline.

CHANGES TO CGT THRESHOLDS

Notably, the reduction in CGT allowances preceding these new rules adds further complexity. The annual exempt amount, which was once £12,300, has been reduced to £3,000 starting on 6 April 2024. For landlords, this change has resulted in higher taxable gains on property sales. The cumulative impact of these adjustments makes strategic management of property portfolios essential.

For instance, a landlord selling a property with a £100,000 gain would previously have excluded the first £12,300 from taxation, leaving £87,700 taxable. However, from April 2024, with a reduced allowance of £3,000, the taxable portion of the same gain would increase to £97,000. Depending on the applicable CGT rate, this could result in thousands more in tax payments.

IMPLICATIONS FOR DIVERSIFIED PROPERTY PORTFOLIOS

Landlords with multiple rental properties may encounter extra challenges in adapting to these changes, especially those who depend on disposals for their retirement planning or portfolio rebalancing strategies. Although the shift in payment deadlines provides temporary relief, the reduced exemptions and aligned self-assessment requirements highlight the necessity for careful tax planning.

The new rules also emphasise the importance of professional advice. Accountants and tax advisers become crucial partners in navigating these changes, developing strategies to utilise unused partner allowances and maximise relief options, such as those available for gifted properties.

PLANNING AHEAD TO STAY AHEAD

It’s evident that the CGT changes effective from 6 April 2025 present a dual challenge for landlords. While payment timing offers some immediate flexibility, landlords must navigate the offsetting pressures of reduced exemptions and increased tax liabilities. Practical measures, such as planning for sales in advance, leveraging one’s personal allowance wisely, and calculating potential liabilities early, remain essential.

With the goalposts shifting, proactive tax planning is now essential to mitigate the financial impact on property portfolios. If you are a landlord unsure about how these changes may affect you or seeking advice to adapt your tax planning strategies, consult a qualified adviser.