Capital Gains Tax Payment for Property Disposals – Change in rules

If you sell a UK based residential property after 1st April 2020, you will be subject to the new rules

UPDATE: HMRC announced it would not charge late filing penalties on reports of CGT on disposals of UK residential property by UK residents made by 31 July 2020. This will allow individuals a period of time to adjust to the new rules. Effectively, this means transactions made between 6th April and 30 June will incur no late filing penalties. Interest will accrue if the tax remains unpaid after 30 days. Transactions made on or after 1st July will need to be reported within 30 days of completion.

HMRC is changing the rules for the submission of information and payment of Capital Gains Tax (CGT) due on UK residential property.

What implications will this have?

From April 2020, individuals disposing of a UK residential property must report and pay the tax to HMRC within 30 days of completion. Please note that this does not apply if you are disposing of your principle private residence.

Effectively, the completion date may not be the end of your property disposal process as you will have an additional process to fulfil. You may have some tax to pay earlier than you would have planned.

Previously, this would have been completed annually via your Self-Assessment (SA) tax return.

HMRC are developing a new service, accessible from GOV.UK, to enable customers to report and pay any capital gains tax liability arising from gains on the sale of a property. This would be made available from April 2020 to facilitate the taxpayer to report and pay their capital gains tax on property disposal. You may or may not need an accountant to assist you with this.

Individuals with no other SA criteria will not be required to register for SA to notify and pay their CGT. However, if the individual is already within the SA, they would need complete a tax return which includes the gain. HMRC have advised that they will be amending the SA return to facilitate this.

Should the taxpayer fail to meet the deadline or make the payment on time, HMRC will levy late filing and late payment penalties and consequently interest will also be charged.

Thank you for reading. We hope that you have found this useful. If you have any questions feel free to get in touch or comment below.

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