New rules have come into force that mean property owners must pay Capital Gains Tax (CGT) much faster than they have been used to.
As of Monday 6 April 2020, property owners must inform HMRC of any CGT liabilities using an online service and pay amounts due within 30 days of selling the property.
Previously property owners have been able to declare any CGT liabilities in their next annual tax return, effectively giving them in excess of a year to settle.
UK residents disposing of UK residential property
The changes for UK residents only apply to disposals of UK residential property. From 6 April 2020, a UK resident disposing of a residential property in the UK making a gain which is liable to CGT will have 30 calendar days from the date of completion to tell HMRC and pay any CGT owed. They will be able to do this using a new online service.
This doesn’t apply if the residential property is the person’s home and it’s been used solely as their private residence during the time it was owned. This is because the disposal will be covered by Private Residence Relief. You can read about Private Residence relief on GOV.UK.
Non-UK residents disposing of UK property
Non-UK residents must continue to report sales or disposals of interests in UK property or land regardless of whether there is a CGT liability, within 30 days of completion of the disposal.
This includes disposals of residential properties, non-residential properties and indirect disposals.
From 6 April 2020, there is no longer an option to defer payment of CGT via a Self Assessment return, and any tax owed must be paid within the 30-day reporting and payment period. From 6 April 2020 non-UK residents will be able to use the new online service, which will replace the current reporting service.
David Nunn is Content Manager at AAT.