From April 2020, HMRC are proposing to accelerate the payment of capital gains tax (“CGT”) on the sale of UK buy to let properties and second homes, both at home and abroad. The changes do not affect an individual’s main residence, which continues to be covered by principal private residence relief.
Currently, CGT on the sale of UK residential property is payable by 31 January following the end of the tax year of disposal. Depending on the date of disposal, this gives the taxpayer between 10 and 22 months from the date of sale to settle the tax.
What are the impact of the changes? Put simply, the change means individuals will need to pay CGT sooner rather than later – within 30 days of completing the sale to be exact. There is also an additional compliance burden as a return disclosing the sale and calculating the CGT payable will also have to be submitted to HMRC within 30 days of completion.
The consultation is currently in progress and runs until 6 June 2018.
For more information, please contact Jill Walker (firstname.lastname@example.org) or your usual AAB contact.