Capital Gains Tax
Oct 12th 2019, 12:42 pm
#1
BE Enthusiast
Thread Starter
Joined: Jan 2010
Posts: 605
Capital Gains Tax
I have received the following from my accountant:
cambridge tax practice |
From April 2020 there are significant changes to capital gains tax. The changes have not been widely publicised so I am bringing this to the attention of all of our clients and contacts.
Reporting Gains for Residential PropertyThe capital gain following the disposal of a residential property sold after April 5, 2020 will have to be reported to HMRC within 30 days of the completion date. If there is capital gains tax (CGT) due it must be paid at the same time.As ever, there will be interest and potential penalties for failure to report the gain or to pay the CGT on time.There are different rates of CGT - 18% and 28% for residential properties, 10% and 20% for other gains - and these rates are dependent on your other income chargeable to income tax. So it is important to put together a detailed computation using the best estimates of all your income and gains for the year.At the moment (for property sales up to April 5, 2020) gains are reported on a self-assessment tax return and CGT paid by 31 January following the year in which the gain was made. Under the new rules, following the initial computation and payment of CGT (within 30 days following completion of the sale), the details of the gain will be recorded on a self assessment return (if you are not registered for self assessment, you have to register) and an adjustment made to the final tax figure.These new requirements will affect those disposing of second homes or rental properties. They will not apply to disposals covered wholly by private residence relief (PPR), but will apply where only partial PPR is available.
Technical Changes - Private Residence Relief
Where a property is sold and it has been your main residence at some point during your ownership then the last 18 months of ownership are exempt for capital gains tax purposes, even if you were not living there during the final period. From April 6, 2020 this period becomes 9 months.
Technical Changes - Letting Relief
Where a property is sold and it has been your main residence at some point and it has been let on a commercial basis then letting relief may be due. The available relief is currently up to £40,000.
From April 2020 this relief will mostly not be available. It continues to be available in very limited circumstances - to people who were sharing occupancy of a property with a tenant throughout the period of letting.
Planning
If you are intending to sell a UK residential property in the near future, it may be advantageous to bring the sale forward so that it falls before April 6, 2020. This is likely to be beneficial if the sale would currently qualify for letting relief.
Also, there can be a timing advantage in selling before April 6, 2020 as the tax becomes payable by January 31, 2021 compared to tax being due within 30 days for a sale after April 5, 2020.
If you would like to discuss these issues, please get in touch.
-- KieranFor and on behalf of Cambridge Tax Practice LtdKieran O'Connor|Tax Director
cambridge tax practice |
From April 2020 there are significant changes to capital gains tax. The changes have not been widely publicised so I am bringing this to the attention of all of our clients and contacts.
Reporting Gains for Residential PropertyThe capital gain following the disposal of a residential property sold after April 5, 2020 will have to be reported to HMRC within 30 days of the completion date. If there is capital gains tax (CGT) due it must be paid at the same time.As ever, there will be interest and potential penalties for failure to report the gain or to pay the CGT on time.There are different rates of CGT - 18% and 28% for residential properties, 10% and 20% for other gains - and these rates are dependent on your other income chargeable to income tax. So it is important to put together a detailed computation using the best estimates of all your income and gains for the year.At the moment (for property sales up to April 5, 2020) gains are reported on a self-assessment tax return and CGT paid by 31 January following the year in which the gain was made. Under the new rules, following the initial computation and payment of CGT (within 30 days following completion of the sale), the details of the gain will be recorded on a self assessment return (if you are not registered for self assessment, you have to register) and an adjustment made to the final tax figure.These new requirements will affect those disposing of second homes or rental properties. They will not apply to disposals covered wholly by private residence relief (PPR), but will apply where only partial PPR is available.
Technical Changes - Private Residence Relief
Where a property is sold and it has been your main residence at some point during your ownership then the last 18 months of ownership are exempt for capital gains tax purposes, even if you were not living there during the final period. From April 6, 2020 this period becomes 9 months.
Technical Changes - Letting Relief
Where a property is sold and it has been your main residence at some point and it has been let on a commercial basis then letting relief may be due. The available relief is currently up to £40,000.
From April 2020 this relief will mostly not be available. It continues to be available in very limited circumstances - to people who were sharing occupancy of a property with a tenant throughout the period of letting.
Planning
If you are intending to sell a UK residential property in the near future, it may be advantageous to bring the sale forward so that it falls before April 6, 2020. This is likely to be beneficial if the sale would currently qualify for letting relief.
Also, there can be a timing advantage in selling before April 6, 2020 as the tax becomes payable by January 31, 2021 compared to tax being due within 30 days for a sale after April 5, 2020.
If you would like to discuss these issues, please get in touch.
-- KieranFor and on behalf of Cambridge Tax Practice LtdKieran O'Connor|Tax Director
