Next April brings yet more change for residential property owners. From the start of the new tax year, a new 30-day CGT payment window will be introduced. This change will mainly apply to sales of second homes or rental property.
Who will be affected by the changes to CGT on property disposals?
Any individual, trustee or personal representative realising a taxable capital gain from the sale or other disposal of UK residential property will be obliged to complete a ‘residential property return’ and pay Capital Gains Tax on account within 30 days of completion. In cases where the gain is not taxable – for example if it is covered by main residence relief – it will not be necessary to make a return. If the new 30-day deadline is missed, interest and penalties will be charged.
Why is this change significant?
Under current rules, CGT must be paid by 31 January of the tax year following the year of disposal. This proposed new deadline therefore represents a huge reduction in the time allowed between selling a residential property and paying the tax.
We anticipate that the 30-day CGT payment window could lead to problems in cases where calculating the capital gain is complex. The new rules do, however, allow for certain estimates and assumptions to be made in calculating the payment on account. Taxpayers who fall within Self Assessment must also report the capital gain on their annual tax return in addition to completing the 30-day residential property return.
With just six months to go until the new rules come into effect it is important to consider the implications of these changes now if you plan to sell a property after April 2020. You will need to be very organised to ensure the deadline is met. Please speak to your RfM advisor as soon as possible so that we can assist where possible.
Contact one of our offices or enquire online.