Deadline changes for capital gains

Property owners have been reminded by the taxman about important deadline changes when paying Capital Gains Tax.

From April 6, if a UK resident sells a residential property in this country, they’ll now have 30 days to tell HMRC and pay any money owed.

If customers don’t inform HMRC about any Capital Gains Tax within 30 days of completion, they may be sent a penalty as well as having to pay interest on what they owe.

The change means that for some people this can be done without having to register for Self Assessment.

The change has been a long time coming. The measure was first announced in the 2015 Autumn Statement. Its introduction was deferred until April 2020 in the 2017 Budget and 2018 saw a technical consultation undertaken.

A capital gain can arise when a property is disposed of. A disposal will typically be where the property is sold by the owner, but it also applies where a property is inherited and then disposed of, or where a property is gifted.

Owners may need to make a Capital Gains Tax report and make a payment when, for example, they sell or otherwise dispose of:

• a property that they’ve not used as their main home
• a holiday home
• a property they let out for people to live in
• a property that they’ve inherited and have not used as their main home

UK residents won’t have to make a report and make a payment when:

• a legally binding contract for the sale was made before April 6 2020
• they meet the criteria for full Private Residence Relief
• the gift was made to a spouse or civil partner
• the gains (including any other chargeable residential property gains in the same tax year) is within their tax-free allowance (called the Annual Exempt Amount)
• they sold the property for a loss
• the property is outside the UK

If customers don’t inform HMRC about any Capital Gains Tax within 30 days of completion, they may be sent a penalty as well as having to pay interest on what they owe.

Sarah Kelsey, HMRC’s deputy director, says: “People don’t usually have to pay Capital Gains Tax if they sell the house they live in, but this is a significant change for customers who do have to pay the tax and who up to this point would include the gain in their Self Assessment return.”

There are also changes for non-UK residents selling both residential and non-residential property in this country.

Non-UK residents will still be required to tell HMRC within 30 days whether there is tax to pay or not and will no longer to be able to defer payment via their Self Assessment return.

To discuss this issue and how it may affect you please call me on 01772 430000