Residential property CGT: New payment rules

13th September 2019

Whenever a Finance Act passes through Parliament it can be all too easy to concentrate on the headline ‘immediate effect’ regulation changes, leaving deferred implementations to be digested at some stage in the future. And it is easy to understand why. The initial Budget announcement is only the start of the process, with consultations and modifications sometimes having a measurable impact on the way in which proposed measures are to be implemented.

However, once enacted even if measures aren’t due to come into immediate effect it is prudent to take time to understand the way in which new regulations may impact effective tax planning. This is certainly the case with one measure from the 2019 Finance Act which relates to the payment of Capital Gains Tax (CGT) in respect of residential properties.

Whilst the sale of main residential properties are generally exempt from CGT, gains on the sale of other residential properties such as second homes or properties let out to tenants are usually subject to CGT. There are some exceptions, so in all but the most straightforward cases it can be advisable to obtain tax advice before committing to the sale.

At present the sale of a UK residential property only needs to be disclosed on the Tax Return for the year in which the disposal took place. The Tax Return and any resulting Capital Gains tax due on the sale is due for payment on 31 January following the end of the tax year.

For example, suppose a residential rental property was sold on 30 September 2019, the disclosure of the disposal will need to be made on a 2019/20 Tax Return which needs to be filed by 31 January 2021. Any capital gains tax due on the disposal of the residential property (which is due at 18% or 28%) will also need to be settled by 31 January 2021.

For disposals of residential property that take place post 6 April 2020, the reporting and tax payment deadline will now be 30 days from the sale date (i.e. the date of exchange). So, if a residential property was sold on 30 September 2020, the disclosure of the disposal and the payment of the tax due will need to be made by 30 October 2020. HMRC will levy penalties if the reporting of the disposal and payment of tax is not made within 30 days.

Please be aware, the gain due within 30 days can be reduced by any brought forward capital losses that were incurred before the property disposal took place.

There still remains a requirement to report the gain on the annual Tax Return. If any other chargeable disposals have been made later in the year that resulted in losses, the Tax Return will allow any overpayments of tax to be reconciled.

The key thing to take away is that if you are planning to dispose of a UK residential property let your accountant know in advance where possible, so that you are fully and prepared to report the gain and pay any tax due before the filing deadline.

Commenting on the new payment timescale Thompson Jenner Partner Simon Lewis said “This amendment to the CGT timetable highlights the importance of effective tax planning. By taking time to understand the options available and the consequences of any decision, individuals can optimise their tax position and budget for payment.”


If you would like to find out more or meet to discuss the tax services which we are able to provide, please contact Simon Lewis or one of our specialist Partners on  01392 258553 or 01395 279521 to arrange a free initial meeting.

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