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From 6 April 2020, a UK resident taxpayer will be required to make a return and payment of Capital Gains Tax within 30 days following the completion of a residential property disposal on a worldwide basis. This rules has applied to non-UK-Residents for a few years now.
The new requirements will not apply, however, where the gain on disposal is not chargeable to CGT, for example where the gains are covered by private residence relief or in connection with a business sale in exchange for shares where the entire capital gain is rolled over as per TCGA92/S162 ‘incorporation relief’.
These new reporting and payment requirements will mean that you will need to have all of the information available to make the return and pay your capital gains tax liability promptly once the property has sold. If you are thinking about selling a residential property then you can save yourself a lot of work or accountancy fees by using one of HMRC’s best kept secrets for calculating CGT, their online CGT calculation wizard – see below.
This piece of online software can be used anonymously too, so you can use it to crunch the numbers before you commit to selling. Accountants often charge hundreds of pounds to do these calculations for you. Now you can do them for yourself, and for free. YOU’RE WELCOME 😀
HMRC also have another version of this CGT calculation software for non-UK-residents – see below.
Penalties and interest will be charged for not filing CGT returns on time and/or for not paying your tax by the due date.
Your capital gains tax liabilities may also increase as a result of two proposed changes to private residence relief that will also apply from 6 April 2020.
From 6 April 2020, the final period exemption will be reduced from 18 months to just 9 months and Lettings Relief (currently worth up to £40,000 per person per property) will be reformed so that it only applies in circumstances where the owner is in ‘shared occupancy’ with a tenant. These combined changes are likely to result in increased capital gains tax liabilities becoming payable because the reduction to the final period exemption will reduce the exempt part of the capital gain, thus increasing the proportion of the gain that is chargeable to Capital Gains Tax and the change to Lettings Relief will effectively abolish this relief entirely in most cases.
If you are thinking of disposing of a property which has not at all times been your only or main residence, but which you have lived in at some point during the period of ownership, you may wish to consider doing so before 6 April 2020 before the changes come in. For capital gains purposes, the date of exchange of contracts is taken as the date of disposal.
Landlord Tax Planning Consultancy is the core business activity of Property118 Limited (in association with Cotswold Barristers).
Professional advice from a qualified Barrister-At-Law, insured up to £2,500,000 per claim.Show Form To Book A Tax Planning Consultation
There will never be an optimal ‘one-size-fits-all’ business structure for tax purposes. The presentation below provides a useful overview of some of the other options you might like to discuss with us.
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