Prior to this new tax year 2020/21 UK residents making capital gains on UK residential sales had until the following 31st January to declare and pay any capital gains tax (CGT) due. So CGT was not due and paid until the January after the tax year in which the gain was made.
After 6 April 2020 CGT on residential sales becomes due 30 days after completion. HMRC have introduced these new rules effective for the 2020/2021 tax year. The changes apply to everybody who makes a gain selling UK residential property whether you are UK domiciled or non-resident. Same rules apply. The rates of CGT have not changed being 18% for basic rate taxpayers and 28% for higher and additional rate taxpayers.
As in previous tax years the rate of CGT continues to be based on an individual’s level of income for the tax year in which the property is sold. The problem is that you may not necessarily know what your final income is going to be but nevertheless you will be expected to make a reasonable judgement.
From 1 July 2020, if you do not report the CGT to HMRC within 30 days of completion, HMRC will issue you with a penalty and interest will be charged on any CGT outstanding from the date of completion until it is paid.
Note that the same rules apply to Trusts.
If you require help or additional information or were unaware of the new rules please contact our Cheltenham office details below. Alternatively please request a call back.
Tel: 01242 241998