From 6 April 2020, if you’re a UK resident and sell a residential property in the UK you’ll have 30 days to tell HMRC and pay any Capital Gains Tax owed.
If you don’t tell HMRC about any Capital Gains Tax within 30 days of completion, you may be sent a penalty as well as having to pay interest on what you owe – so it’s really important that everyone involved in the sale of a residential property fully understands these changes.
When you need to report Capital Gains Tax within 30 days
You may need to make a Capital gains Tax report and make a payment when, for example, you sell or otherwise dispose of:
- a property that you’ve not used as your main home
- a holiday home
- a property which you let out for people to live in
- a property that you’ve inherited and have not used as your main home
But you won’t have to make a report and make a payment when:
- a legally binding contract for the sale was made before 6 April 2020
- you meet the criteria for Private Residence Relief
- the sale was made to a spouse or civil partner
- the gains (including any other chargeable residential property gains in the same tax year) are within your tax-free allowance (called the Annual Exempt Amount)
- you sold the property for a loss
- the property is outside the UK
New online service
HMRC will launch a new online service to allow you to report and pay any Capital Gains Tax owed.
You will need to register online for the service to obtain a Capital Gains Tax reference in order to submit the report and make any payment due.
It is important to note that if you are registered for Self-Assessment, the Capital Gain will also need to be declared on your annual Self-Assessment Tax Return and the payment of Capital Tax during the year will be treated as payments on account towards your final tax liability.
We can help you with every step of the process should you dispose of a property subject to Capital Gains Tax after 6th April 2020.
For all enquiries relating to Capital Gains Tax on property disposals, please contact us on 01384 402930.