Changes to Capital Gains Tax on Residential Property
Are you thinking of selling residential property in the near future, if so you may wish to bring forward the sale date because some reliefs are changing and new reporting and tax payment requirements are being introduced.
From 6 April 2020 when you sell your main residence or a house which has been your main residence you need to be aware of the following changes:
- Currently your final 18 months of ownership is treated as exempt for capital gains tax purposes, irrespective of what the property has been used for as long as at some point the property was your main residence. As from 6 April 2020, this period is being reduced to 9 months.
- Lettings Relief – this is an additional relief available, up to a limit of £40k if you have let out your main residence on a commercial basis. As from 6 April 2020 relief will only be available to if you continue to live in the house while renting it out.
Report a sale of residential property
Currently, any capital gains tax due is payable on 31st January following the tax year in which the disposal takes place, with the disposal being reported on the self-assessment tax return.
As from 6 April 2020, individuals and trustees with gains on the disposal of residential property will be required to make a return and a tax payment on account within 30 days of completion. These changes are very onerous and bring the due dates for reporting and payment in line with the current rules for non-UK residents.
If you require further information on the above, please email Graham Blakey or call us on 01539 729727.