Brace yourselves, property investors! The winds of change are blowing in the realm of Capital Gains Tax (CGT) for UK property sales. Are you equipped to navigate this shift?
So, what exactly is Capital Gains Tax? Essentially, it's the tax you pay on the profit you make when you sell a property that's appreciated in value.
As of the 6th of April 2020, the process for reporting and paying CGT underwent significant changes. Now, if you're a UK resident selling a residential property, you have a 60-day window to inform HMRC and settle any CGT due. Miss this window, and you might find yourself slapped with a penalty. Importantly, this shift affects both UK and non-UK residents alike.
You'll need to report to HMRC and pay CGT when selling or disposing of:
- A property that hasn't been your main residence
- A holiday home
- A property you've rented out
- A property you've inherited but haven't lived in
But hold on, there are exceptions. You won't need to report and pay if:
- A legally binding contract for the sale was created before 6 April 2020
- You qualify for full Private Residence Relief
- The property was sold or gifted to a spouse or civil partner
- The gains (including from any other residential property sales in the same tax year) are within your tax-free allowance, known as the Annual Exempt Amount
- The property was sold at a loss
Non-UK residents, don't think you're off the hook! You still need to report all sales or disposals of UK properties, irrespective of any CGT liability, within 60 days of completion.
One more crucial change: deferring CGT payments through your Self-Assessment return is no longer an option. All tax due must be paid within the 60-day reporting and payment period. This applies to disposals of both residential and non-residential properties as well as indirect disposals.
Navigating the property market is an exciting journey, but knowing the tax landscape is vital. Keep your eyes open to these changes, because in the property game, knowledge truly is power. Stay informed, stay ahead!