Throgmorton: Property Disposal – New Rules

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From 6th of April 2020, the UK Government is changing the rules relating to the reporting and payment of Capital Gains Tax (“CGT”) due on the disposal of a UK residential property. 

Which property disposals could be relevant?

  • Property that is not your Principal Private Residence;
  • Rental properties;
  • Holiday homes;
  • Inherited property;
  • Trust property; and/or
  • Gifted property.

What are the new changes?

  • The CGT due on disposal will need to be reported and paid to HMRC within 30 days of completion of the disposal;
  • There will be a new online service for reporting and paying the CGT. Guidance will be released on this service by HMRC;
  • Non-UK residents, who currently report UK property disposals within 30 days, can no longer defer payments to the self assessment deadline of 31 January;
  • Taxpayers who do not meet the other criteria for Self- Assessment, will no longer need to register for Self- Assessment to report the capital gain and instead will report and pay through the new online service;
  • Taxpayers who are already within the scope of Self- Assessment, will need to ensure that the capital gain is also included on their Self- Assessment tax return. HMRC will be amending the Self-Assessment return to allow for this; and
  • Late filing and late payment penalties will apply, and interest will be also be

Examples where the new CGT rules do not apply

  • The legally binding property contract is made before 6th April 2020;
  • Gift of the property is made to spouse/civil partner, even after the 6th April 2020;
  • The capital gain is covered by the annual exemption (£12,000 in 2019/20); and/or
  • There is a loss on the sale of the property.

If you need further information, please complete the form below.

 

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