Can I Claim Estate Agent and Solicitor Fees Against My Gain

Introduction

Capital Gains Tax is payable on the profit you make when selling or disposing of an asset that has increased in value. For property sales, the taxable gain is based on the difference between what you paid for the property and what you received when you sold it, minus certain allowable costs.

These allowable costs can make a significant difference to how much tax you owe. Knowing which expenses qualify will ensure you only pay tax on your true profit.

What costs can you deduct when calculating your gain

When working out your capital gain, you start with:

Selling price (or market value if gifted)
minus
Purchase price (what you originally paid for the property)

You can then reduce the gain by deducting certain costs associated with buying, selling, or improving the property.

Typical allowable deductions include:

Estate agent or auctioneer fees.

Solicitor or conveyancing costs for both purchase and sale.

Stamp Duty Land Tax paid when you bought the property.

Surveyor or valuation fees.

Costs of advertising the property for sale.

The cost of significant capital improvements, such as extensions or renovations.

These expenses must be directly related to the transaction and supported by receipts or invoices.

Can you claim estate agent fees

Yes, estate agent fees are allowable deductions for Capital Gains Tax purposes.

Estate agents charge a commission or fixed fee for marketing your property, arranging viewings, and managing the sale. Because this cost is directly linked to the sale, HMRC allows it to be deducted from the sale proceeds when calculating your gain.

For example:
If you sold your property for £350,000 and paid £5,000 to your estate agent, you can reduce your gain by £5,000 when working out your taxable profit.

Keep all invoices and proof of payment as HMRC may ask to see evidence of the expense.

Can you claim solicitor or conveyancing fees

Yes, solicitor or conveyancing costs incurred when buying and selling a property are also deductible.

These fees are considered part of the acquisition and disposal costs because they relate directly to the legal transfer of ownership. You can claim:

The solicitor’s fees from when you bought the property.

The solicitor’s or conveyancer’s fees from when you sold it.

Other legal fees related to the transaction, such as preparing contracts or dealing with title issues, can also be included.

However, legal fees for unrelated matters, such as tenancy agreements or mortgage advice, cannot be claimed.

What cannot be claimed

Certain costs are not deductible for Capital Gains Tax purposes, including:

Mortgage interest or repayment costs.

General maintenance, cleaning, or repairs before sale.

Insurance and council tax.

Removal costs when moving out.

Any costs already claimed as an expense against rental income while you owned the property.

If you have previously claimed an expense as a deduction for income tax, you cannot claim it again for CGT.

Claiming improvement costs

You can also reduce your gain by claiming the cost of capital improvements to the property. These are works that increase its value or extend its lifespan. Examples include:

Adding an extension or conservatory.

Installing a new kitchen or bathroom (if it replaces an old one with something of higher quality).

Converting a loft or garage into living space.

Routine maintenance and repairs, such as redecorating or replacing broken windows, are not allowable as they do not enhance the property’s value beyond restoring it to its previous condition.

To claim improvement costs, you must have invoices and receipts that show the work was carried out and paid for.

Example of how deductions work

Let’s say you bought a property for £200,000 and sold it for £320,000.

Your costs were:

Estate agent fees: £4,000

Solicitor fees on purchase: £1,500

Solicitor fees on sale: £1,500

Stamp Duty Land Tax when purchased: £2,000

Improvement works: £10,000

Your calculation would look like this:

Sale price: £320,000
Less purchase price: £200,000
Less allowable costs: £19,000
(£4,000 + £1,500 + £1,500 + £2,000 + £10,000)

Taxable gain: £101,000

You would then apply any available CGT allowances (such as the annual exemption) and pay tax on the remaining amount.

Record keeping

To support your claim, you must keep records of all relevant expenses, including:

Invoices from estate agents and solicitors.

Bank statements or proof of payment.

Receipts for building or improvement works.

Copies of contracts and completion statements.

HMRC can request this evidence if they review your CGT calculation, so keep records for at least five years after the 31 January Self Assessment deadline for the tax year in which you sold the property.

How to report and pay Capital Gains Tax

If you sell a residential property and make a taxable gain, you must report and pay the CGT to HMRC. You can do this:

Through your Self Assessment tax return, or

Using HMRC’s Capital Gains Tax on UK property account online service.

For UK residential properties, the gain must be reported and the tax paid within 60 days of the sale’s completion date.

Common mistakes to avoid

Forgetting to include buying costs like legal fees or Stamp Duty.

Trying to claim non-allowable expenses such as mortgage payments or general repairs.

Failing to keep receipts or payment evidence.

Misunderstanding the difference between capital improvements and maintenance.

Conclusion

Estate agent and solicitor fees are legitimate, allowable deductions when calculating your Capital Gains Tax liability on a property sale. They directly reduce your taxable gain, often saving you a significant amount in tax.

Make sure you keep all invoices, receipts, and legal documents related to the sale and purchase. If in doubt, seek advice from a tax adviser or accountant to ensure you include all allowable expenses and calculate your gain accurately.

Understanding these rules will help you pay the correct amount of Capital Gains Tax and avoid overpaying when you sell a property.