• Property Tax Solutions

Capital gains changes round the corner

If you dispose of a buy-to-let property then you are likely to be liable to capital gains tax. Broadly, the taxable gain is the difference between the original cost and the sale proceeds. For the current tax year your annual capital gains tax exemption is £12,000 rising to £12,300 for the 2020/2021 tax year.

If you are a basic rate taxpayer then you pay 18% on the gain, whilst a higher rate taxpayer will pay 28% on the gain.

Currently, you pay capital gains tax via your self-assessment tax return e.g. a property sold on 31stMarch 2020 would be included on your tax return to 5 April 2020, with the tax payable by 31 January 2021.

The change – 30 day payment window from 6 April 2020 From 6 April 2020, if your make a taxable capital gain from UK residential property, the new rules mean you will have to pay any capital gains tax owed within 30 days of the completion of the sale or disposal.

The method for doing this is by completing and submitting a 'residential property return' and making a capital gains tax payment on account. 30 days means there will be very little time to calculate and report the capital gains tax payable. Failure to comply with the new rules will result in HMRC charging penalties and interest.

The new rules only apply to UK residential property sold on or after 6 April 2020, and only where a liability to capital gains tax arises.

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