Changes to Capital Gains Tax payments for UK Property Sales

20 March 2020

From 6 April 2020, if you’re a UK resident and sell a residential property in the UK you’ll have 30 days to tell HMRC and pay any Capital Gains Tax (CGT) owed.

If you don’t tell HMRC about any CGT within 30 days of completion, you may be sent a penalty as well as having to pay interest on what you owe – so it’s really important that everyone involved in the sale of a residential property fully understands these changes.

Capital Gains Tax is a tax on the profit when you sell or dispose of an asset that’s increased in value. You may need to make a CGT report and make a payment when, for example, you sell or otherwise dispose of;

  • a property that you’ve not used as your main home throughout the whole period of ownership
  • a holiday home
  • a property which you let out for people to live in
  • a property that you’ve inherited and have not used as your main home throughout the whole period of ownership

You 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
  • you meet the criteria for Private Residence Relief throughout the whole period of ownership
  • the sale was made to a spouse or civil partner
  • the gains (including any other chargeable residential property gains in the same tax year) are within your annual exempt amount
  • you sold the property for a loss
  • the property is outside the UK

Non UK residents who currently report property disposals within 30 days can no longer defer payment.

A new digital service will be available from April 2020 to make it easier to report and pay your CGT property disposals liability. This is currently being tested by HMRC but agents will not be able to report the transaction without a separate authority which will be able to be done through the live system. The current authority for income tax self assessment which we hold for you will be insufficient.

The most important point to remember is that, if you’re in the process of selling a property where you won’t complete until after 5 April 2020 or you’re considering doing so, you need to speak to your adviser.