30-day payment window on Capital Gains Tax
New deadlines came into effect earlier this year for paying Capital Gains Tax after selling a residential property in the UK.
From 6th April 2020, UK residents who sell a residential property in the UK have been required to tell HMRC and pay any Capital Gains Tax owed within 30 days. This is in line with the existing rules for non-residents.
If HMRC isn’t informed about any CGT within 30 days of completion, you may be subject to a penalty, as well as interest on the tax owed. This is true for both UK and non-UK residents.
What is Capital Gains Tax?
Capital Gains Tax is a tax on the profit or “gain” you receive when you sell an asset that has increased in value.
When do I need to report any Capital Gains Tax within 30 days of a property sale?
If you are a UK resident, you will need to report and pay CGT within 30 days when you sell, or dispose of:
- A property which you have not used as your main home for the duration of ownership
- A holiday home
- A property which you have let out for other people to live in
- A property which you have inherited and not used as your main home
You won’t have to report and make a payment under the new rules when:
- A legally binding contract for the sale was made before 6th April 2020 (but any gain should be declared on the usual self-assessment tax return)
- You meet the criteria for full Private Residence Relief
- The sale or disposal of the property was made to a spouse or civil partner
- All chargeable residential property gains made in that tax year are within your annual tax-free allowance
- You sold the property for a loss
- The property is outside the UK (but any gain should be declared on the usual self-assessment tax return)
If you’re a non-UK resident, you must continue to report sales or disposals of UK property or land, residential or non-residential, regardless of whether there is a CGT liability within 30 days of completion. You will now not be able to defer CGT payments via your self-assessment return and any tax owed must be paid within the 30 days.
How do I report and pay Capital Gains Tax?
HMRC has launched an online service which allows you to report and pay any Capital Gains Tax owed. The service is available to use for both UK residents and Non-UK residents.
This service is available through the government website HERE. You will need a Capital Gains Tax on UK Property account to use this service, for this, you’ll need your Government Gateway user ID and password.
How can Property Tax People help?
Here at Property Tax People, we can help you to gather relevant information when planning a sale of a property. We will be able to advise you of the potential amount payable so that plans can be made accordingly.
We can also advise you if there are any available capital losses that can be offset against CGT due.
Foe more information, please don’t hesitate to get in touch on: hello@propertytaxtpeople.co.uk or 01905 700949.
