CGT payment changed to 30 days this new tax year

8:54 AM, 10th April 2020, About 5 years ago 3

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Property owners selling are reminded from 6 April 2020, if a UK resident sells a residential property in this country they will now only have 30 days to tell HMRC and pay any money owed. It means for some it can be done without having to register for Self Assessment.

There are also changes for non-UK residents selling both residential and non-residential property in this country. Non-UK residents will still be required to tell HMRC within 30 days whether there is tax to pay or not and will no longer to be able to defer payment via their Self Assessment return.

HMRC will launch a new online service to make it easier to report and pay any Capital Gains Tax. Owners may need to make a Capital Gains Tax report and make a payment when, for example, they sell or otherwise dispose of:

A property that they’ve not used as your main home
A holiday home
A property which they let out for people to live in
A property that they’ve inherited and have not used as their main home

Sarah Kelsey, Deputy Director, HMRC, said: “We want to help customers know exactly what they need to do, as it’s really important that everyone involved with the sale of a residential property fully understands the changes.

People don’t usually have to pay Capital Gains Tax if they sell the house they live in, but this is a significant change for customers who do have to pay the tax and who up to this point would include the gain in their Self Assessment return. There will be lots of help and guidance available to individuals and agents, or those representing trusts, and we are providing a new online service to make it easier for all our customers to both notify and pay online within 30 days

If customers don’t tell HMRC about any Capital Gains Tax within 30 days of completion, they may be sent a penalty as well as having to pay interest on what they owe.

A capital gain can arise when a property is disposed of. A disposal will typically be where the property is sold by the owner, but it also applies where a property is inherited and then disposed of, or where a property is gifted. But a UK Resident individual 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
They meet the criteria for full Private Residence Relief
The gift was made to a spouse or civil partner
The gains (including any other chargeable residential property gains in the same tax year) is within their tax free allowance (called the Annual Exempt Amount)
They sold the property for a loss
The property is outside the UK

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Comments

Dennis Forrest

13:57 PM, 10th April 2020, About 5 years ago

Sounds good in theory but if you sell a property early in the tax year, especially with the difficult situation at the moment you might not, and neither will HMRC, know how much you are going to earn in the 2020-2021 tax year. They can't assume your income will be the same as tax year 2019-2020.
CGT rates on properties are 18% or 28% depending on the whether you pay income tax at 20%, 40% or 45%. Presumably, although I don't know, and to be fair to tax payers, HMRC will have to assume initially that all of your gain is taxed at the lower rate of 18% and come back to you for the other 10% after you have submitted your income tax return in January 2022. I can't see it working any other way. Pleased if anyone can comment differently.

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moneymanager

17:26 PM, 10th April 2020, About 5 years ago

Reply to the comment left by at 10/04/2020 - 13:57
The change requires a payment "on account" to HMRC who then determine the definitive charge, of course the timing of that later could, as you state be up to 22 months later, a nice free loan from us to them and it's serious, we sold a number of properties for profit in one year but by bringing into charge allowable sideways loss relief, other provisions and historic losses ended up with a bill under £2k

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Stewart

10:32 AM, 13th April 2020, About 5 years ago

I would like to understand how the new capital gains tax changes will affect property sales tax considerations.
Previously if I had, for instance, two profitable property disposals and two loss making tax disposals they would be aggregated at the end of the year. So if I sold two properties, making me 20,000 and 28% tax is 5600 and then I sold two properties, losing 20,000, I could offset the gain of 5600 against the loss of 20,000, producing a loss of 14,400.
Now it seems that if I have two sales, making say a 20,000 profit I will pay 28% as tax, £5600. If I then sell two loss makers, losing 20,000, presumably I carry that forward as a loss and get no money back.
It would seem that organizing the order of sale now becomes very important as you should sell loss making property first.
Am I understanding this correctly?

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