Currently, where a CGT liability arises for UK residents on the sale of a residential property, the liability is declared through self-assessment tax returns and payable by 31 January following the tax year in which the gain arises.
From April 2020 all UK residents must report disposals of UK residential properties to HM Revenue and Customs and also make a payment on account for the CGT due, within 30 days of COMPLETION.
The changes do not apply where the gain made is not chargeable to CGT such as where the property has been the individual’s only/main residence for the entire period of ownership and therefore covered by the principle private residence relief. The rules also only apply to residential property currently.
The new rules being brought in are therefore going to mainly affect UK residents with second homes or landlords looking to sell their residential property lets.
Within 30 days of completion UK residents must:
- Calculate the gain made on the property (using estimates if necessary)
- Report the gain to HM Revenue and Customs
- Make a payment of CGT to HMRC
These new rules along with the changes to lettings relief and reduction of the final period of principle private residence relief all coincide with each other meaning that a disposal of UK residential properties could mean a higher tax bill from April 2020.
If you are thinking of selling a chargeable property you may wish to consider accelerating the sale to give additional time to pay the CGT.
Any CGT payable on a property that is sold on or before 5 April 2020 will be due for payment no later than 31 January 2021 however, where a property is sold on or after 6 April 2020 any CGT payable will be due no later than 30 days after completion.
If you have any queries or you wish to discuss this further, please do not hesitate to contact Muhammad Shahid via email at firstname.lastname@example.org or whatsapp 07460130618.