To my understanding if you have above a certain limit after sale of a house it does. A colleague 'got caught' after a house sale when he obviously had a large sum of money in his account. He'd moved to our area for work and having 5 children and needing another two rooms for his mother, who lived with them, had great difficulty finding a house large enough, within their price bracket. After a year with no success he found he had to pay Capital gains Tax and subsequently had even less capital to purchase with..
You use the words '
got caught' - are these the words your colleague used, as HMRC do catch people who sell houses liable to cgt and don't declare it, as they link up all SDLT returns. We get at least one enquiry a year on clients who 'missunderstand' the rules and sell something and get caught. The client that I dealt with most recently got a penalty of 40% of the tax as well. So maybe he'd sold 2 properties and not declared the cgt on one or he had a very large garden.. Or else he was going to have to pay a lot of stamp duty on the purchase.
If you have lived in a house for the whole time you owned it there is no cgt as you get Principal private residence exemption whatever the value.
If you move into care, the last 36 months of ownership are exempt. If you rent a house out there is also a £40,000 lettings exemption.
As Kevin said there is also an £11,300 exemption, so in practice most people moving into care and letting a home for a period will not pay cgt. If the person dies before the home is sold there is no cgt.
(Note the gain is calculated over the total period of ownership, so cost £40,000, sold £440,000 - gain is £400,000 then divide by the number of months owned and you get the monthly gain for tax purposes, so no intermediate values are needed. If purchased before March 82 the march 82 value applies not cost)
If you sold the house and invested it, and the investments were sold, cgt would still apply, although again it is likely that the annual exemption applies.
