Some important changes for the conveyancing profession are coming into place from 6 April 2020 that will affect UK residents who sell a residential property that gives rise to capital gains tax (CGT). Some examples of sales that may give rise to CGT are selling a second home or selling an inherited property that you do not live in.
From 6 April 2020 any liability for CGT must be paid within 30 days of completion of the sale. This can be done via a new standalone online return to HMRC. Previously payment for CGT had until the Self Assessment tax deadline of 31 January after the tax year in which the disposal/sale is made to complete a tax return and pay the CGT.
The new 30-day deadline means that people have less time to calculate the CGT, report the gain and pay the tax. If individual taxpayers wish to report the gain themselves online they will need to have a Government Gateway account to submit the return or alternatively they can authorize a tax agent to do the return on their behalf.
Selling or disposing of a residential property that gives rise to a taxable gain will fall within the new 30 day deadline if the sale/disposal is completed on or after the 6 April 2020.
The Governments Website (Gov.UK) will be providing updates on how the new system will work.
It is therefore essential that people plan ahead to meet the deadline or risk penalties and any property owners who intend to sell/dispose additional property that will give rise to CGT contact their tax agent or adviser to inform them a sale is underway now rather than wait for the annual Self Assessment tax return process.
This is a seismic change for property owners with taxable gains on their residential properties as they will have to have their records up to date in advance of a sale and that the property details are readily to hand including the date the property was originally purchased, the original purchase price and details of any improvements made over the period of ownership, in some cases property valuations may also be needed.
Burtons are not authorised to give financial advice and cannot tell you whether or not you have any exemptions, have full use of any applicable CGT allowance or relief, or what the amount will be that you will need to pay; you will need to take independent financial advice on this.
If you would like any advice regarding selling your property or would like an estimate please contact us on 01634 540 046 or firstname.lastname@example.org