Thursfields warning of tight deadline to pay Capital Gains Tax | Residential Property
Property owners selling homes at a profit have less than a month to complete before a new Capital Gains Tax (CGT) regime comes in that means the tax must be paid within 30 days.
Thursfields Solicitors is reminding sellers that new rules introduced by the Finance Act 2019 mean that CGT must be paid much quicker than previously.
Julian Field, Director of residential conveyancing at Thursfields Solicitors, said: “For property sales before 6 April 2020, capital gains are reported in personal tax returns for the year in the which the sale took place.
“This could mean the seller had up to 21 months to report the gain and pay the CGT.
“However, from 6 April 2020, the gain must be reported and the CGT paid within 30 days of the sale being completed.”
Failure to comply will trigger an automatic penalty and incur interest on the unpaid CGT. The new rules also apply to trustees of trusts for UK residents that dispose of UK residential property.
Julian said: “The new rules apply to disposals of residences, holiday homes, residential lettings and inherited homes that are not used as main residences throughout the period of ownership.”
However, there are exceptions to the 30 day deadline including where the legally binding sale contract was made before 6 April 2020, if principal private residence relief is available, or the disposal was made to a spouse or civil partner.
There is no CGT to pay if the capital gain is within the annual CGT exempt amount £12,000, the property was sold at a loss, or the property is outside of the UK.
Julian said: “HMRC is launching a new online facility for reporting and paying CGT in April 2020, which can be used by UK residents and non-UK residents selling qualifying property from 6 April 2020, but the message is clear.
“If you can complete your sale before that date, you can buy yourself some time to pay CGT – as you will need to declare by 31 January 2021.”