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Capital Gains Tax

Changes are happening to the Capital Gains Tax payment.

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Changes are happening to the Capital Gains Tax payment for UK property sales. Are you ready?

Capital Gains Tax is a tax on the profit when you sell something that’s increased in value. In this case it will be property.

What are the changes?

From the 6th of April in 2020, if you are a UK resident and sell a residential property in the UK then you will have 30 days to let HMRC know and pay any Capital Gains Tax you owe. If you fail to report this to HMRC within 30 days of completion, you may be sent a penalty. These changes will affect both UK and non-UK residents.

You will need to report to the HMRC and pay Capital Gains Tax when you sell or dispose of:

  • 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

However, there are some exceptions and you don’t always have to do this if you don’t have the right criteria. You won’t have to make a report and payment when:

  • a legally binding contract for the sale was made before 6 April 2020
  • 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 (called the Annual Exempt Amount)
  • you sold the property for a loss
  • the property is outside the UK

Non-UK residents

If you’re a non-UK resident then you must still continue to report sales or disposals of interests in UK, regardless of whether there is a Capital Gains Tax liability within 30 days of completion of the disposal.

Now you will not be able to defer any payment f Capital Gains Tax via your Self-Assessment return. Any tax that you owe will need to be paid within the 30-day reporting and payment period. This includes disposals of residential properties, non-residential properties and indirect disposals.

Need help working out whether you will need to report to HMRC or need some advice. At Elite Financial Accounting we can help you with these new changes to ensure you are complying and correctly paying what is needed, so that you don’t receive any hefty penalties. Get in touch with us today to find out how we can help you!

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