After 5 April 2020, tax on sales of UK residential property will be due within 30 days of completion. If you are considering selling a property, please get in touch.
From 6 April 2020, the following changes will take place:
Tax payable within 30 days of sale
Residential property sales completing on or after 6 April 2020 must be declared to HM Revenue & Customs (HMRC), with any Capital Gains Tax (CGT) paid within 30 days of completion. You should seek advice prior to a potential sale to ensure you have all the necessary information to submit the return in time. If the disposal does not result in a taxable gain, you are exempt from the 30 day reporting requirement.
The accelerated reporting of a property disposal will result in a payment on account towards the overall capital gains tax liability for the tax year, which will need to be reported on a Self-Assessment Tax Return in the usual way. However, the payment of tax will take place much sooner and capital losses realised later in the same tax year cannot be used against the property disposal until the full tax return is prepared.
Limitations to private residence relief and lettings relief
Where a property has been your main residence at some point during ownership, the last 18 months prior to sale have, until now, been treated as occupied for the purposes of Private Residence Relief. This deemed occupation is being reduced to 9 months for disposals after 5 April 2020.
In addition, Lettings Relief was previously available if you had let out your main home for a period of time during ownership. This relief is largely abolished from 6 April 2020 and only available where there is a degree of shared occupancy. It will therefore no longer be available on most property disposals, and Lettings Relief periods previously accrued will no longer be taken into account when calculating the taxable gain on a future sale after 5 April 2020.
Finally, non-residents should remember that they are now liable to CGT on sales of both commercial and residential property. This must also be declared to HMRC and the tax paid within 30 days of completion.
If you are considering selling a property, please get in touch with Gunhild Dam on 0113 297 6770.