Do you have to pay Capital Gains Tax on Park Homes?
Posted by Justin Allitt in Advice – Buying, Living or Selling a Residential Park Home, January 8, 2023
When you buy or inherit a park home, you can, of course, sell it on at a later date. But when you do sell your park home, are you liable for capital gains tax?
The short answer to the question is yes you maybe liable to pay capital gains tax on a park home. To determine whether capital gains tax is due on the sale of a park home, you will need to consider the following factors:
- Whether the park home is your main residence
- How long you have owned the park home
- The amount of profit you made on the sale of the park home
It is important to note that the rules around capital gains tax on park homes can be complex and may depend on your individual circumstances. It is advisable to seek the advice of a tax professional if you have questions about your tax liability on the sale of a park home.
If you are thinking of Selling your park home, Click Here
What is Capital Gains Tax?
According to HMRC, capital gains tax applies whenever you sell an asset which is worth more now than when you bought it. If, for example, you bought something for £10,000, and sold it for £30,000 years later, you may be subject to this type of tax. However, there are a few types of asset which are exempt. This whole process is known as ‘disposing of an asset’, which can also cover gifting an item as well as selling it.
Capital gains tax applies to most personal assets, including park homes. However, the amount of tax you pay will differ depending on how much you sell your asset for. This relates to your personal capital gains tax-free allowance for the year.
For example, if your park home sells for £10,000, and you have an allowance of £11,000, you will not have to pay any tax on a sale. This is because it falls below the personal allowance bracket.
Do I Have to Pay Capital Gains on Mobile Properties?
As already said, in most cases you don’t have to pay capital gains on park homes if you are living in the property. However, even if the home is a second home or has been rented out, you may not have to pay the tax if you make less money than your allowance in any tax year. Also, you won’t have to pay capital gains on park homes if you give them to your spouse, or if you give them to a charitable organisation.
You can also reduce the amount you pay in tax if you claim for specific reliefs or losses. This will apply when you file a tax return each year. Generally, HMRC will require you to file a return for any income during a tax year by the end of each January if you file online. Tax years apply from the 6th of April to the 5th of April.
Will I Still Need to File a Return if I Don’t Profit?
It is always a good idea to report capital gains in your tax return. However, HMRC advises you will only need to do this if you already file self-assessment returns, or if your home sells for four times your allowance. Reporting losses is a little different and follows a separate procedure.
It is always a good idea to ask HMRC directly for help with capital gains returns, particularly if it is your first time reporting such matters. However, you should also consider approaching an accountant who can help you understand what you need to report.
What Should I Do if I’m Unsure?
If you’re unsure about what to do with capital gains on mobile homes, make sure to ask an independent advisor for support. As mentioned, an accountant can help you understand self-assessment. What’s more, you may also be able to ask for help from your local Citizens’ Advice Bureau.
How Do I Report Capital Gains?
If you need to report capital gains on park homes or mobile property, you can do so via tax return, or you can report through HMRC’s real-time system. However, you can only do this if you have a Gateway ID and are a UK resident.
Reporting and paying for capital gains real-time is a little different than through returns. You will need to report any gains of this kind by the end of December the tax year after you sold your home. You should also be ready to pay straight away. You can change any reports you send through the real-time service.
How Much Do I Have to Pay?
The amount of money you pay through capital gains on mobile homes varies. It changes based on how much income tax you normally pay each year.
If you pay the higher rate, you will need to pay 20% of gains on most chargeable assets, and 28% on anything classed by HMRC as ‘residential property’. For basic taxpayers, the amount you pay depends on how much you sell your park home for, what your taxable pay is, and whether you can use any tax reliefs.
The HMRC offers a full guide for you to look through here. It can be very useful if you’re not sure where you stand on paying capital gains tax!
Read our guide on Gifting a park home
What if I Make a Loss?
If you make a loss, you could reduce the amount of money you have to pay through capital gains tax. For example, if you sell a park home that has lost value since you took ownership, you could offset this on a tax return.
Other special rules can apply, too. Make sure to read up on HMRC’s full advice.
Other Things to Consider
HMRC requires you to keep records of anything you need to pay capital gains on. Therefore, if you sell a park home, you need to make sure you keep details of your sale, including how much you received. You should keep hold of any documents and records relating to the sale for up to a year after the tax deadline has passed. You will also need to make sure you include details on any fees that have applied along the way.