Do Tenants In Common Have To Pay Capital Gains Tax?

If you are wondering whether or not tenants in common have to pay capital gains tax, you will find the answer to your question in the following blog post. In addition to answering the question of tenants in common and capital gains tax, we will also explore other possible tax implications faced by tenants in common.

Do Tenants In Common Have To Pay Capital Gains Tax?

Yes, tenants in common are liable to pay Capital Gains Tax (CGT) when they sell their share of the property and earn a profit through the same. CGT is a tax on the profit made from selling or disposing of an asset, such as a property, and it is payable by the individual or individuals who own the asset.

When tenants in common sell their share of a property, they are only liable for CGT on the portion of the gain that corresponds to their share of the property. This means that if two tenants in common own equal shares of a property, they will be liable for CGT on 50% of the gain.

It’s worth noting that each individual in the UK has an annual tax-free allowance for CGT. For the current tax year, this allowance is £12,300. If the gain on the sale of the property is below this amount, then no CGT is payable.

However, if the gain exceeds the annual allowance, then CGT will be payable on the amount above the allowance. The rate of CGT varies depending on the individual’s income and other factors, but it typically ranges from 10% to 28%.

If you are a tenant in common, it is important to understand your tax situation so that your tax payments are managed correctly. If you are unsure about your tax liability as a tenant in common, you may benefit from professional advice on your individual tax situation 

As a tenant in common, you should keep in mind that there are certain exemptions and reliefs available for certain types of property and circumstances that may affect your liability for CGT.

Can Tenants In Common Avoid Paying Capital Gains Tax?

No, it is not possible to avoid capital gains tax if you are a tenant in common. However, there are some ways to reduce the amount of tax due. For example, capital gains tax rates depend on the length of time you have owned the investment, with a lower rate applicable if you’ve owned the property for a longer period. 

You may also be able to take advantage of a personal allowance, where the first £12,300 of any capital gains is exempt from capital gains tax. In addition, you may qualify for taxpayers’ reliefs such as the enterprise investment scheme or the entrepreneurs’ relief. 

What Are Some Guidelines For Tenants In Common?

Although tenants in common can benefit from pooling their money and resources to buy a property, they should also be aware of potential problems that may arise if they don’t follow certain advice. 

First, tenants in common should have a written legal agreement that sets out in detail the rights and responsibilities of each partner in the agreement. This should include details on how profits will be split and the terms of the sale or transfer of the property.

Tenants in common should also provide the other partners in the agreement with official copies of the agreement so that all parties understand the conditions. All copies should be kept safe and regularly updated in case changes need to be made in the future. 

Finally, tenants in common should ensure that all taxes, such as stamp duty and capital gains tax, are paid on time. The consequence of not doing so is potentially incurring additional fines and penalties so make sure to keep up with all relevant taxes and fees.


The above discussion helps to conclude that as a tenant in common, one would be required to pay capital gains tax on the share of their property; should they sell it and make a profit through the proceeds of the transaction.


Joint tenants vs tenants in common – what does it mean for tax? – TaxScouts

CG70500 – Land: tenants in common and joint tenants: introduction – HMRC internal manual – GOV.UK

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