Changes to Capital Gains Tax

New rules introduced on 6 April 2020 mean that you now have just 30 days from the completion of a property sale to calculate the Capital Gains Tax (CGT), report it and pay it to HMRC. This new ‘residential property return’ is a standalone return to HMRC, which is submitted online.

 

This is effectively a ‘payment on account’ and the gain will still need to be reported on a Self-Assessment tax return, when the final tax will be calculated with any underpayment by 31 January after the tax year in question.

 

If you live in the UK, you will need report and pay CGT when you sell:

 

  • a property that you’ve not used as your main home
  • a holiday home
  • a property which you let out for people to live in
  • a property that you’ve inherited and have not used as your main home

You will not have to report or make a payment when you sell if:

  • you meet the criteria for full Private Residence Relief
  • the sale or disposal was made to a spouse or civil partner
  • the gains (including any other chargeable residential property gains in the same tax year) are within your tax free allowance  
  • you sold the property for a loss
  • the property is outside the UK

Failure to report and pay any CGT on time is likely to lead to interest and potentially a penalty.

 

 

Blog post uploaded 15 Dec 2020