Penalised over CGT due to Government emergency rules?
My wife and I were selling a Furnished Holiday Let with a completion date of 3rd April 2020, in order to take advantage of our 2 x CGT allowance of £12,000 (tax year 2019 – 2020) and not have to pay the CGT until 31st January 2021.
However, due to the Government imposed ruling, we were not allowed to complete on that date and have now completed on 29th May 2020, but of course the rules have now changed and as a result, the CGT is due 30 days after completion.
This is very unfair and costly to us, through no fault of our own.
My questions is:
Have HMRC made any allowances / concessions for these situations, i.e. can we roll forward last year’s CGT Allowance and defer payment of the CGT due until 31st January 2021?
Many thanks
Max
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Tenants fallen out and neither will leave?
Member Since November 2013 - Comments: 68
10:47 AM, 3rd June 2020, About 6 years ago
Which Government imposed restriction stopped you from completing on 3rd April 2020 Max.
On what date did you exchange contracts ?
Member Since September 2013 - Comments: 217
11:14 AM, 3rd June 2020, About 6 years ago
My understanding is that the date of exchange of contracts is the date that determines when the property is sold, not the date of physical transfer of the asset.
A relative was caught in a similar position but many solicitors implemented a process of combining exchange & completion on same day in order to protect clients. In her case the exchange of contracts did not take place before 5/4 and hence she got caught with the exchange happening in this year. It was a bidding situation and the highest bidder attempted to delay exchange & completion but was firmly told that if they did not promptly deal with the matter she would deal with the second highest bidder.
Unfortunately a lot of expectations have been impacted by doing reasonable actions but then finding a lot of collateral damage. The implications are still being worked out. Scotland was even worse as the registrar shut down causing major contractual problems for which there were no ‘force majeure clauses’ in place. There are going to be a number of new laws required to deal with this sort of thing in future.
Member Since February 2016 - Comments: 5
11:43 AM, 3rd June 2020, About 6 years ago
https://www.sintons.co.uk/sintons_probate/capital-gains-tax-on-the-sale-of-uk-residential-properties-a-covid-19-update/
Member Since March 2014 - Comments: 17
12:32 PM, 3rd June 2020, About 6 years ago
Reply to the comment left by Alistair Cooper at 03/06/2020 – 10:47
Sorry, I should have added that we were due to exchange and complete on the same day. It was the restriction imposed that prevented us exchanging that caused the issue, I guess.
Member Since March 2014 - Comments: 17
12:36 PM, 3rd June 2020, About 6 years ago
Reply to the comment left by Parm Lal at 03/06/2020 – 11:43
Thanks for the link. Helps a bit but not enough.
Member Since September 2018 - Comments: 111
2:41 PM, 3rd June 2020, About 6 years ago
Whilst I understand the frustration this can cause- the CGT would have had to be paid either way, now you just do not get 6 months interest free. Probably for the best as its paid and finished with
Member Since March 2014 - Comments: 17
3:09 PM, 3rd June 2020, About 6 years ago
Reply to the comment left by at 03/06/2020 – 14:41
But you have missed the point that we have lost out on last years CGT allowance and will have to use this years. We sell one property per year to take advantage of these allowances.
Member Since September 2018 - Comments: 111
5:06 PM, 3rd June 2020, About 6 years ago
Well you left that important piece of information out didn’t you. You can however appeal the payment as long as you can provide the evidence that exchange and completion were contracted to take place 3rd April 2020. Pretty sure your professional advisor is aware of this.
However assuming you don’t sell another property before 5-4-21 then you aren’t being penalised in CGT
Member Since March 2014 - Comments: 17
5:11 PM, 3rd June 2020, About 6 years ago
Reply to the comment left by at 03/06/2020 – 17:06
We sell down one property each year, so we will be penalised by one years allowance for each of us.
Member Since September 2014 - Comments: 166
10:12 AM, 4th June 2020, About 6 years ago
Like Alistair Cooper, I'm missing something. What government ruling prevented your sale from completing by 5th April?