Buy-to-let landlords, property investors and second home owners are being urged to beware of a ‘dramatic change’ to the existing capital gains tax regime which will come into effect in April next year.
From April 2020, HMRC will enact legislation requiring UK residents to submit capital gains tax returns, as well as paying any CGT due within 30 days of completion of the sale of residential property.
Currently, individuals under self-assessment can instead report the sale and pay across their liability through their tax return.
Hilesh Chavda, a legal tax specialist in Royds Withy King’s Private Wealth team, is urging owners of more than one property to carefully consider the impact that this might have.
He commented: “A dramatic change to the payment of tax on residential property gains will come into force on 6 April 2020.
“Capital gains tax [CGT] in relation to residential property will need to be paid within 30 days of completion, which is a marked change from the current position.
“At the moment, the CGT deadline is 31 January following the end of the year in which the sale was made which, in some cases, could be as long as 22 months.
“Where CGT is due, the change could mean that sellers have to get funds in place to cover the CGT liability before the sale is completed as 30 days is not very long at all. This could be a particular issue where there are large historic gains.”
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Don’t really understand this. You sell a property get funds from solicitor and pay the tax immediately. Not great compared to before obviously but am I missing something
You have assumed that there is large capital to be transferred. If someone has remortgaged at a higher value than purchase price they may not have enough equity left to pay the capital gain tax and would man they’re in the poo.
Now they only have a short time to pay the tax. Before it may not have been a problem because, say, they may be selling off other assets that would provide them with enough capital, or perhaps provide a loss to offset.
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