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Changes in CGT Rules

There are changes for 6th  April 2020 to CGT when selling a residential property!!

The deadline to pay CGT on residential property has been reduced to 30 days!!

How did you pay Capital Gain Tax before April 2020?

Currently, reporting disposals of property (that aren’t your main private residence) and paying any resulting Capital Gains Tax is not due until the self-assessment tax return deadline. So, if you sold a property during 6th April 201x – 5th April 201y you would have had up to 31st January 201z to report it and pay the tax.

When will we pay Capital Gains Tax on residential properties from April 2020?

From 6th April 2020 legislation is changing meaning disposals of UK residential property on which CGT is due will have to be reported and the tax paid within 30 days of the disposal. If you don’t tell HMRC about any CGT within 30 days of completion, you may be sent a penalty as well as having to pay interest on what you owe.

The 30-day period will start from the completion date (not the date from which contracts are exchanged). The property seller will be required to calculate the amount of tax payable on account, taking into consideration unused losses, the person’s annual exempt amount and an appropriate rate of tax after estimating the person’s taxable income for the year. Reconciliations of payments can be made at the end of the tax year.

HMRC will be launching a new online service to allow you to report and pay any CGT owed.

Are there any exemptions to this 30 day rule?

Certain disposals by UK-residents will not be subject to the 30-day reporting and payment deadline. These include circumstances where a gain on the disposal is not chargeable to CGT, for example where the gains are covered by Principal Private Residence relief.

Non-resident companies are charged to corporation tax rather than CGT on disposals of UK residential property and so will not be subject to the 30-day period. Companies liable to corporation tax will generally be required to pay their liability within 9 months and 1 day following the end of an accounting period.

If you would like any further assistance with this please call Sarah on 01229 808173 or email her on sarah@dndaccountancy.co.uk