Selling a UK Residential Property

Are you planning to sell your home, or maybe you already have? You may need to think about the implications of capital gains tax. Read on to find out more.

Changes to Capital Gains Reporting Requirements:

Legislation introduced in the 2019 Finance Act brought significant changes to the reporting of residential property disposals and the payment of Capital Gains Tax (CGT) from 6 April 2020.

The measure applies to individuals, trustees and personal representatives and the sale or gifting of UK residential property.

  • A return in respect of the disposal must be delivered to HMRC within a “payment window” of 60 days (for disposals made after 27 October 2021) of the completion date (the date when all the money changes officially hands) and
  • A payment on account of the tax due must be made at the same time

Disposals made between 6 April 2020 to 26 October 2021 are subject to the original time limit of 30 days.

The self assessed calculation can take into account any available losses and the annual exemption amount. The rate of tax will be determined after making a reasonable estimate of the amount of other taxable income for the year.

The new rules will not apply where the gains are covered by private residence relief (where the property has been your home throughout ownership), unused losses or the annual exemption amount. However, if the property has been your home for part of the ownership and rented out for part of the period then the calculation is more involved.

Sixty days after completion is a very short timescale in which individuals must calculate, report and make payment on account of the CGT. CGT computations can be complex and it can take time to establish all the facts to make an accurate computation of the taxable gain, please speak to us as soon as possible if you are looking to sell a residential property in the next 12 months.

With careful planning, it may be possible to reduce your capital gains tax liability so contact us in advance!

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