Whether you're flipping homes in Bangor, developing flats in Belfast, or offloading commercial-to-resi conversions in Newry, understanding the updated CGT landscape is critical to protecting your profit margins.

📌 What’s Changed in 2025?

The government introduced a series of CGT reforms that took effect from October 30, 2024, and are now fully applicable for the 2024/25 tax year. These are intended to increase tax revenues from asset sales and align CGT more closely with Income Tax in certain scenarios.

The key updates include:

• Reduction of the CGT Annual Exempt Amount from £6,000 to £3,000 (from April 2024).
• Increased scrutiny on “property trading” disguised as investment, targeting developers operating via personal names.
• Enhanced reporting requirements and shorter payment windows for property disposals.
• HMRC crackdowns on "rollover" and "business asset disposal" relief misuse.

🧾 Who Is Affected Most?

The changes are especially relevant for:

• Sole traders and partnerships flipping or developing property in their own names.
• Developers using SPVs (Special Purpose Vehicles) for short-term projects.
• Buy-to-sell investors disposing of residential assets regularly.
• Those exiting long-held investments with significant capital appreciation.

If you develop property for resale rather than long-term letting, you may no longer qualify for CGT treatment at all — and instead face full Income Tax on profits under "trading" rules.

🔍 A Quick Example

Imagine you buy and refurbish a terrace in Portadown for £100,000 and sell it 8 months later for £180,000.

• Pre-2024 CGT rules (as an individual investor): Gain = £80,000 CGT: ~£22,960 (assuming higher rate 28%)
• 2025 scenario (if HMRC views it as trading income): £80,000 profit taxed at Income Tax rates — up to 45% Total tax: ~£36,000

That's a £13,000+ tax increase, simply based on how HMRC categorises the nature of your activity.

⚠️ What’s the Difference Between CGT and Income Tax for Developers?

• Capital Gains Tax (CGT) applies when selling investment properties held long-term.
• Income Tax applies to profits from property development, refurbishment, or flipping as a business.

If HMRC believes your activity shows "badges of trade" — frequency, intent to make a profit, use of borrowed money — your profits may be taxed as trading income, not capital gains.

🧠 Planning Opportunities in Light of the CGT Changes

✅ Use Limited Companies for Development

For developers operating multiple projects, using a limited company is now more tax-efficient. Corporation Tax (25%) is generally lower than higher-rate Income Tax (40–45%), and profits can be retained or reinvested with more control.

✅ Structure Long-Term Projects Strategically

If you’re holding developments as rentals before sale (e.g., 5+ years), you may still qualify for CGT — but documentation and intent are key.

✅ Offset Gains with Legitimate Costs

Now more than ever, you need to maximise deductible expenses, including:

• Professional fees
• Materials and labour
• Finance costs (for developers)
• Marketing and agent fees

✅ Use Spousal Transfers

Married couples can transfer assets between them tax-free — potentially doubling access to CGT exemptions and lower tax bands.

📋 What Developers in Northern Ireland Should Be Doing Now

1. Assess how you’re structuring your projects If you’re flipping in your own name — stop. The risk of being taxed as a trader is now higher than ever.
2. Clarify your investment vs trading status HMRC is actively reviewing whether you’re building wealth or running a business. The distinction could cost you tens of thousands in tax.
3. Forecast and plan CGT liabilities With the exemption down to £3,000 and gains taxed up to 28% (or higher as trading income), there’s less room for error.
4. Build tax into your GDVs and appraisals Always calculate net of tax when assessing profitability — particularly on exit.

🧮 Are You Missing CGT Relief Opportunities?

Even with the new rules, there are still reliefs available:

• Incorporation Relief (if moving a sole trade property business into a company)
• Rollover Relief (if reinvesting proceeds into new development assets)
• Holdover Relief (when gifting business assets)

Each has strict qualifying criteria — and mistakes can be costly. A single HMRC challenge can trigger a full reclassification of your past deals.

🤝 Get Specialist Support from Taxpertise

At Taxpertise, we work closely with developers, builders, and flippers across Northern Ireland to minimise tax liabilities and protect project profits. From SPV setup to CGT forecasting and HMRC disclosures, we help you stay compliant and in control.📞 Book a free property tax consultation – and ensure you’re not overpaying or misreporting CGT on your 2025 projects.