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Changes to Capital Gains Tax on UK Residential Property Sales

August 26, 2020

By Gabriella Grant (Personal Tax Senior) at RMT Accountants & Business Advisors Ltd

From 6 April 2020 HMRC have introduced new rules surrounding the declaration and payment of Capital Gains Tax (CGT) on residential property sales in the UK. The changes have impacted both UK and Non-UK residents.

Prior to 5 April 2020, UK residents selling UK residential property that is subject to CGT would have until 31 January following the end of the tax year in which the property is sold to declare and pay any CGT due. However, when selling a UK residential property which is subject to CGT after 6 April 2020, you will now only have 30 days from the date of completion to report and pay any CGT due.

The rate of CGT will depend on an individual’s level of income for the tax year in which the property is sold. You are therefore required to make a reasonable estimate of the tax payable on the sale. Capital Gains Tax is payable at the rates of 18% for basic rate taxpayers and 28% for higher and additional rate taxpayers.

Due to the coronavirus (COVID-19) pandemic, late filing penalties were initially not applied on disposals of UK residential property if completed before 1 July 2020 which were reported by 31 July 2020.

From 1 July 2020, if you do not report the CGT to HMRC within 30 days of completion, HMRC will issue you with a late filing penalty. Interest will also be charged on any tax still outstanding 30 days after completion on all transactions made on or after 6 April 2020.

 

Non-UK residents

If you are a non-UK resident you must continue to report disposals of any UK property or land within 30 days of completion, regardless of whether there is a CGT liability. However, you can no longer defer payment of the CGT via your Self-Assessment Tax Return. Any CGT due will need to be paid within 30 days of completion in line with the new rules.

 

Trusts

If you are a trustee who disposes of any UK residential property held in a UK resident trust, you must ensure that any Capital Gains Tax liability due is reported and paid within 30 days of completion, in the same way as for UK resident individuals.

For further information of advice on anything covered in this article please contact Gabriella Grant – t: 0191 256 9500 or e: gabriella.grant@r-m-t.co.uk

 

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