I think I'll be around for a while
The first part of the gain realised in the year of sale is tax free - this is the Annual Exempt Amount and is currently £10,100. If you own a property jointly, you each have this amount available.
Furthermore, in calculating the gain you are allowed to take inflation into account. This is called Indexation Allowance and uses rates
published by HMRC a few months in arrears.
You can also offset amounts you have spent improving (but not maintaining) the property, each adjusted by the Indexation Allowance.
Absolutely.
So let's do an example. House purchased by married couple for £250,000 in January 1998 and sold for £400,000 in November 2010. 3 bedrooms, living and dining room with 3 rooms used exclusively for 1/2 the time (of course because it is for less than 100% of the time there is no apportionment to business use for CGT purposes, but let's go with it for a while...) so 3 / 5 x 0.5 = 30% business use.
Unindexed gain is £150,000.
Indexed rise is 0.422 from the previous link so indexation allowance is £250,000 x 0.422 = £105,500.
Net gain £150,000 - £105,500 = £45,000
Gain apportioned to business use = 30% x £45,000 = £13,500
Each spouse has a chargeable gain of £6,750 which goes on their tax return, but no CGT payable due to AEA of £10,100.
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