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May 12th 2019

Capital Gains Tax on residential property gains - soon you'll have only 30 days to pay

Second homeowners selling their property will soon have to pay Capital Gains Tax (CGT) within 30 days, rather than the usual up-to-21 month window.

If a residential property is classed as your main or principal private residence, some or all of any gain arising on disposal may be exempt from CGT.

Taxable gains on the disposal of a residential property which does not qualify for private residence relief are subject to CGT at rates of either 18% or 28%, depending on your level of taxable income.

As the rules currently stand, any CGT will be due by 31 January following the end of the tax year in which the property was disposed. As an example, if you sold a residential property that was not your main residence on 30 June 2019, under current rules any tax would not be due until 31 January 2021.

However, HMRC has announced that it wants to make paying CGT “simpler and quicker” for taxpayers, while addressing the fact that payment of CGT is “out of step” with the position of taxpayers within PAYE.

UK residents who dispose of residential property on or after 6 April 2020 will be required to deliver a return to HMRC and pay any CGT due within 30 days of completion.

Completing a return and making payment of any CGT due pre-supposes that the calculation of CGT in respect of the sale is a simple matter. Sometimes it is.

However, if you look at circumstances where for example, a property has been occupied as a main residence only during part of the period of ownership, where perhaps part of a property has been occupied as a main residence and part let out, or where there is a property with large grounds, these all carry with them complex aspects.

Contact us today for assistance with your property or CGT questions.

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