At present any Capital Gains Tax (CGT) you pay on a property other than your residence is currently paid through your self-assessment tax return made at the end of the year. This means that if you sell a property in the tax year 2019/2020 you would not normally have to declare and pay the tax until 31st January 2021. However, as from the 6th April 2020 any liability due will have to be paid within 30 days of completion of the sale. A provisional calculation of the gain will need to be reported to HMRC and any tax liability settled at the same time. Ultimately, the gain will still be recorded on your tax return and any over or under payment of tax will be dealt with. If tax is overpaid this will not be repaid until the tax return is submitted on the 31st January the following year and the return processed.
It is therefore important that if you are to sell a property post 6th April 2020 that you obtain all the relevant information required to calculate the potential taxable gain which includes any Stamp Duty paid on the purchase of the property, any Estate Agents fees and Solicitors fees and any improvement costs etc. There will be penalties and interest payable to HMRC on any late submissions.
There are also changes made to Private Residential Relief which could be claimed if you lived in a property that you are selling and is subject to CGT. This relief amounts to £40,000 per individual and as from 6th April you will only be able to claim this relief if you live at the property when the property is being sold i.e. you share occupancy with the tenant which severely limits those people who qualify.
If you have any questions please do not hesitate to contact one of our specialist lawyers who will be able to advise you further.
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