Selling a UK residential property

Posted on: 07/10/2019

Changes to Capital Gains Reporting Requirements:

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

The measure will apply 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 30 days 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

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.

Thirty 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.

Changes to Relief on Former Main Residences:

In addition to the above, the following changes also apply as from 6 April 2020:

  • When calculating private residence relief, the final exemption period will be reduced from 18 months to only 9 months.
  • Letting relief (applicable previously where the property has at any time been occupied as your main residence and the property has been let) will only apply to those periods where the owner was, or is, in shared occupancy with the tenant.

Are you planning on selling residential property? If so, please contact us in advance!