Changes to Capital Gains Tax (CGT) to catch out owners of UK residential property

Published by Jo White on 25 February 2020

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Individuals, trustees and personal representatives who sell a UK residential property on or after 6 April 2020 will have just 30 days to file a return and make a payment on account of any Capital Gains Tax (CGT) due. Those not aware of the changes will be exposed to interest and penalties.

No return will be due where the gain is not chargeable, for example, because it is covered by Private Residence Relief. The changes are in line with the CGT rules which already exist for non-UK tax residents who dispose of UK property.

The normal rates of CGT applicable to UK residential property will apply – 18% for basic rate taxpayers and 28% for higher and additional rate taxpayers.

Jo White, Tax Director, said: “Under the current regime CGT is paid by individuals anywhere between 10 and 22 months after the date of the disposal. From 6 April 2020, a payment on account of any CGT due must be made within 30 days of the transaction completing.

“Judging by the conversations we are having, many are still unaware of the changes, leaving them open to penalties and interest if they fail to meet their tax reporting and payment obligations.”

Taxpayers who file their return late may be subject to:

  • Immediate late filing penalty of £100.
  • Three months late – penalties of £10 per day for 90 days.
  • Six months late – the greater of 5% of the tax due or £300.
  • 12 months late – the greater of 5% of the tax due or £300.

HMRC could also charge penalties and interest for underpaid CGT.

Jo White concludes: “If you are planning to sell a UK residential property on or after 6 April 2020 please contact us in advance of the property disposal. We can then advise you in advance of your potential CGT liability and on any planning opportunities that might be available to you, for example, with regards to maximising capital losses. We can also prepare the calculations,  submit the CGT return on your behalf and advise you on the payment due and how this should be paid.”

To discuss Capital Gains Tax and the potential implications on or after 6 April 2020, contact Jo White or call +44 (0)330 124 1399.

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