Get ready for changes to Capital Gains Tax payment for UK property sales

placeholder

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 owed.

If you don’t tell HMRC about any Capital Gains Tax 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

Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.

Read full guidance on Capital Gains Tax.

When you need to report Capital Gains Tax within 30 days

You may need to make a Capital gains Tax 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
  • 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

But 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
  • 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 tax free allowance (called the Annual Exempt Amount)
  • you sold the property for a loss
  • the property is outside the UK

New online service

HMRC will launch a new online service to allow you to report and pay any Capital Gains Tax owed.

Advice for agents

If you act as an agent for a customer who disposes of a UK residential property you will need to:

  • register with Agent Service
  • ensure that any Capital Gains Tax liability due for your client is reported and paid for within 30 days of completion of the disposal

The service will allow you to see previous submissions and amend if necessary.

If you’re a non-UK resident

If you’re a non-UK resident you must continue to report sales or disposals of interests in UK property or land, regardless of whether there is a Capital Gains Tax liability within 30 days of completion of the disposal.

You will no longer be able to defer payment of Capital Gains Tax via your Self Assessment return, and any tax owed must be paid within the 30-day reporting and payment period.

This includes disposals of residential properties, non-residential properties and indirect disposals.

From 6 April 2020 non-UK residents will be able to use the new online service, which will replace the current reporting service.

Find out if you need to pay Capital Gains Tax if you’re not resident in the UK.

Trusts

If you represent a Trust you will need to register with the Trust Registration Service. If you are an existing Trust you will be able to use your UTR to access the service.

If you represent a Trust for a UK resident who disposes of a UK residential property you must ensure that any Capital Gains Tax liability due is reported and paid for within 30 days of the completion of the disposal.

If you represent a Trust for a non-UK resident who sells or otherwise disposes of a residential property, commercial property or indirect disposal you must ensure that any Capital Gains Tax liability due is reported and paid for within 30 days of completion of the disposal.