Capital Gains Tax (CGT) may arise when you sell an asset that has increased in value.
Since 6 April 2020 Taxpayers need to report the disposal of a UK residential property within 30 days of completion where a CGT charge arises, with payment of the estimated tax also due within 30 days. Following the recent budget, the government has doubled the period for filing and payment of capital gains tax (CGT) on residential property from 30 days to 60 days.
If you sell a UK residential property that has only ever been your home any gain you make will be fully relived by Principle Private Residence (PPR) relief and it will not need to be reported.
We have had a few clients recently who have sold a property that needed reporting and have not been made aware of the CGT implications by their solicitor. This has created cashflow difficulties in getting the funds to be able to pay the tax in such a short time and will incur penalties for not reporting on time.
For example, you may have:
- buy-to-let properties
- Furnished holiday lets
- Inherited property
If you are a non-UK resident and have disposed of a UK residential property the same rules apply however, you have the option to rebase the cost of the property to its value at 5th April 2015 and therefore only the increase in value from that date to the date of disposal would be liable to CGT.
When do you not have to pay?
Most individuals disposing of a UK residential property will fall under the 60-day reporting rule. There are some exceptions such as:
- You do not usually need to pay tax ongifts to your husband, wife, civil partner, or a charity.
- You may get tax relief if the property is abusiness asset.
- If the property was occupied by a dependent relative, you may not have to pay.
If estimates have had to be used these will need to be dealt with via a self-assessment tax return submission once the tax year has ended even if you don't usually have to file a tax return.
Please contact us if you have any questions, we are always happy to help.