Changes to paying Capital Gains Tax on UK Property Disposals

From 6^th April 2020 payment deadlines for Capital Gains Tax when disposing of a UK residential property are changing. Currently, when a UK resident disposes of a UK residential property, the capital gain is reported to HMRC on their annual UK tax return for the tax year in which the disposal takes place. Any Capital Gains Tax liability is due on the 31 January following the end of the tax year, along with the tax return. However from the 6^th April 2020, HMRC will be implementing a 30 day deadline within which they must be notified of the property sale and the Capital Gains Tax must be paid.

In order for taxpayers to conform, HMRC will be launching a new online service which will specifically allow taxpayers to report and pay any Capital Gains Tax owed.

The following are examples of when Capital Gains Tax may be payable, if you sell or dispose of a UK residential property:

• A property that you’ve not used as your main home
• A holiday home
• A property which you let out

The following are examples of when you will not have to submit a report or payment:

• A legally binding contract for the sale was made before 6^th April 2020
• You meet the criteria for full Private Residence Relief
• The gains (including any other chargeable residential property gains in the same tax year) are within your tax free allowance
• The property is outside the UK

Non-UK residents who are not within the self-assessment regime are already required to report direct and indirect disposals of UK land or property) within 30 days regardless of whether it generates a gain or loss. As of 6^th April 2020, those already within self-assessment will no longer be able to use the self-assessment regime. Instead, the 30 day deadline will apply to them as well.  

The 30 day deadline commences from the date of completion of the sale. In the instance you fail to notify HMRC within this timeframe they may issue you with a penalty charge, along with an interest charge on the outstanding Capital Gains Tax owed.  

The same rules will apply if you represent a trust, however of the Trust is not already registered with HMRC, a Capital Gains Tax liability will also bring the Trust within the UK’s Trust Register, which is an anti-money laundering directive.

If you are a UK resident considering selling a UK residential property, or a non-UK resident contemplating disposing of a UK residential or commercial property, indirectly or directly, and would like assistance with the calculation of the level of Capital Gains Tax due, the completion of your Capital Gains Tax report and advice regarding the amounts payable to HMRC, or support when registering your trust with the Trust Registration Service. Please do contact us to get in touch with one of our property tax specialists.