Changes to CGT - Reporting and Payment : Effective 06/04/2020

The eagle-eyed amongst us may have spotted HMRC’s news story in late February reminding tax payers that are individual UK residents that they will have to operate under new rules from 6 April 2020 in respect of reporting Capital Gains and paying Capital Gains Tax. From 6 April 2020 gains must be reported and the tax paid within 30 days of the disposal. As usual, failure to comply will trigger a penalty and incur interest on the unpaid tax. These rules also apply to trustees of trusts for UK residents that dispose of UK residential property.

Disposals prior to 6 April 2020 are reported in the usual way and personal tax returns for the year in which the disposal takes place or is deemed to take place.

These rules apply to disposals of main residences, holiday homes, residential lettings and inherited homes that are not used as main residences throughout the period of ownership however there are certain exceptions. These do not have to be reported within the new deadline:-

  • If a legally binding sale contract was made before 6 April 2020.
  • Principal private residence relief is available.
  • The disposal was made to a spouse or civil partner.
  • The Capital Gain (together with any other chargeable residential property gains in the same tax year) are within the annual CGT exempted amount.
  • The property is sold at a loss.
  • The property is outside the UK.

Non UK residents are subject to similar rules already which were introduced last year and they have a 30 day reporting deadline whether or not any Capital Gains Tax is in fact due.

Anyone who is contemplating selling a property on which there may be a gain would be well advised to do so quickly and get contracts exchanged before 6 April 2020, so they can defer payment of the tax - otherwise they will be reporting and paying within 30 days of the disposal.

Posted on: 08/03/2020

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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