Property owners with taxable gains on their residential properties need to be aware of the changes to how the tax is paid and changes to valuable exemptions.
Under the current system, these gains would be reported in the self assessment tax return and the tax is payable on 31st January after the tax year in which the disposal is made.
From 6 April 2020 individuals with capital gains on the sale of residential properties must complete a new standalone online return to HMRC and pay the tax due within 30 days of completion of the sale.
There are implications for calculating the tax where the property had previously been your main residence. Under the current rules, if you sell a residential property which was at one time was your main residence and then subsequently rented out, it was possible to claim letting relief up to £40,000 from any capital gain. The new rules determine that this relief will only be available if the owner was living in the property during the letting period.
In addition to this, the final period of ownership will also be cut from 18 months to just 9 months where the property was once the principal private residence.
The obligation to file a return is wholly on you as the taxpayer, rather than the solicitor or estate agent dealing with the conveyance. Therefore if you are contemplating selling a residential property that will be subject to capital gains tax, contact us as soon as possible so that we can help you to calculate the tax due and submit the return on time.
For any questions, please contact Karen Keeling.