Capital Gains Tax (CGT), a tax on the increase in value of an asset between the date of purchase and the date of sale. Currently, these gains are declared on an individual’s personal tax return and the tax payable by 31 January following the end of the tax year in which the disposal took place.
There have been many changes regarding the taxation of gains on residential properties in recent years and the latest, we say latest but it was first announced in the 2015 Autumn Statement, is due to come in to effect from 6 April 2019 for non-UK residents and from 6 April 2020 for UK residents.
HMRC are intending on introducing a 30 day payment window for tax payable on the disposal of residential properties by UK residents and extending the 30 day payment window already in place for the disposal of residential properties by non-UK residents to all disposals of UK land by non-UK residents. This measure will affect individuals disposing of residential properties such as rental properties and second homes. Instead of having a window of potentially 21 months for payment, this is going to be drastically reduced to 30 days from the date of completion.
This will lay a heavy burden on the taxpayer and their advisor to make sure the calculation of tax is completed and submitted to HMRC in the timeframe and that is assuming the calculation of the taxable gain on the sale of a residential property is straightforward. It can be however when there are periods of owner occupation and letting, it can quite complicated.
We will wait and see how HMRC deal with these changes in the next few months however it just reiterates the importance of getting professional tax advice before the sale of any property.