Partner Article

Property owners must prepare for changes to Capital Gains Tax Reporting on Residential properties

Those selling residential property in the UK need to be ready for changes to Capital Gains Tax (CGT) rules from early April, one of the UK’s Top 60 accountancy and business services firms is advising.

There are currently different rules for the payment of CGT, depending on whether or not you are a UK resident and, for land and buildings, whether the property is residential or commercial. Up until 5th April 2020, UK residents pay all CGT under Self-Assessment. However, as Colin Burns, a Partner at Gerald Edelman explains, changes will shortly come into effect.

“From 6th April, CGT on residential property sales must be declared and a payment on account made to HMRC, within 30 days of completion,” explains Burns.

“Non-residents have been required to pay CGT on disposals of UK residential property within 30 days since April 2015, unless the individual is under Self-Assessment, in which case the normal Self-Assessment payment date has applied.

From 6 April 2019, this extended to direct disposals of non-residential UK property by non-residents and indirect disposals of interests in a ‘UK property rich’ entity. However, from this 6th April, all CGT due by non-residents on disposals of UK land and property, and on indirect disposals of interest in UK property rich entities, must be paid within 30 days even if the individual is under Self-Assessment.“

There is no change for non-residential property or sales of other assets, such as shares. The Self-Assessment payment deadline of 31 January following the tax year of disposal will continue to apply to these disposals. CGT due by non-residents on direct disposals of UK immovable property and the indirect disposals of interests in property rich entities, such as companies and trusts holding UK property must be paid within 30 days. This applies whether or not the individual is under Self-Assessment and will align the payment of tax with the deadline for filing the Non-resident CGT return, which has always been due within 30 days.

“CGT payment dates vary depending on whether you are a UK resident or a non-resident disposing of UK property,” continues Burns. “For UK residents disposing of residential land or property completed on or after 6 April 2020, new rules mean that a payment on account of CGT must be made within 30 days of completion. For example, for a disposal on 31 July 2020 payment must be made by 30 August 2020 with payment made alongside submitting a new online property disposal return.”

For non-residents, disposals of UK immovable property and indirect disposals of an interest in a ‘UK property rich’ entity, which completes on or before 5 April 2020,

CGT will be due within 30 days unless the individual is under Self-Assessment, in which case the normal Self-Assessment payment date of 31 January after the end of the tax year of disposal will continue to apply. For disposals of UK immovable property and the indirect disposal of an interest in a ‘UK property rich’ entity, which complete on or after 6 April 2020, all CGT due by non-residents on disposals of UK land and property must be paid within 30 days, even where the individual is under Self-Assessment. If the 30-day payment deadline and filing is missed, penalties may be due.

This was posted in Bdaily's Members' News section by Adam Gilbert .