Tax experts are declaring a new Capital Gains Tax rule will result in a seismic shift for property owners. Read on if you are thinking about selling up after the 6th of April.
If you’re considering selling a residential property (which is not wholly exempt) after the 6 of April, you should be aware of a new Capital Gains Tax (CGT) rule.
Currently, a taxpayer has until the self-assessment tax deadline of 31st of January to file the return. The taxpayer therefore has up to 22 months after the sale of the house to calculate, report and pay the Capital Gains tax as part of the annual tax return. This is about to change and become more complex.
What’s changing?
The
Government is introducing a 30-day payment window for capital gains tax on residential
property sales.
Property owners, with taxable gains on their residential properties, must submit a standalone return to HMRC. Plus the tax owed must be calculated, reported and paid in full within 30 days of the completion of the sale.
You will, however, be exempt
if you lived in your house for the whole time you owned it. There will normally
be no taxable gains on the sale and you are therefore covered by CGT private
residence relief. If in doubt speak to an expert.
Tax rules are rarely simple.
If you moved out or let your property for a long period of time you should speak to a tax expert to find out if you are exempt or owe CGT. It is more cut and dried if you are selling a second home or a Buy to Let property – you are subject to the new CGT rule.
Read on to find out the
impact the new CGT rule will have.
How will pay you CGT?
You will now have to submit your
CGT return online via the Government portal within 30 days of the date the
missives conclude/contracts are exchanged
You will also need to
include property information detailing the:
- date the
property was acquired - acquisition cost
and allowable costs - details of any
improvements made over ownership period - the sale
proceeds and any allowable costs
When will you pay CGT?
You
will have a short window of 30 days to calculate and pay the full CGT amount.
What if you aren’t
registered?
You
can either create an HMRC Gateway account or authorise a tax agent to do it for
you.
As I mentioned earlier, tax can be complicated. That’s why I must alert you to a further layer of complexity brought about by the new 30 day window. When you make the sale and calculate the CGT to be paid you need to base your calculation on the whole of your tax year income. This can be difficult to estimate, particularly at the start of the tax year and for the self-employed and buy to let landlords, and could result in mistakes and financial penalties.
If you have any questions about Capital Gains Tax or any other tax queries contact ammu today for expert tax advice.