This April will see a major change in how individuals must report and pay capital gains tax. The new requirements affect the sale of residential properties.

This change has been planned for a while, however it has been brought forward and applies to property sales completed within the imminent tax year (6 April 2020 – 5 April 2021) and beyond.

What are the changes involved?

Where tax is payable for gains made from the sale of residential property, two things must happen within 30 days of completion:

  1. A provisional calculation of the gain involved must be submitted, and
  2. The estimated tax due must be paid.

The gain must still be entered to the tax year’s self-assessment return. Any capital gains tax above the provisional payment is due by the usual self-assessment deadline, (31 January following the end of the tax year).

It’s important to note that this requirement applies to all residential property vendors, including people currently outside of the self-assessment system. All residential properties are involved, both inside and outside of the UK. If you need specialist international tax advice, please let us know.

Two bands of Capital Gains Tax may apply to the profit made from residential property sales. The lower band is 18%, rising to 28% tax due. Tax payable may be reduced by bringing forward capital losses from previous years. Please ask us for details – we’re here to help.

HMRC has stated that penalties apply to errors as well as late submissions and payments. These details are not yet available.

Emily Bridges of Re:Accounts adds: “These changes coincide with reduced capital gains tax reliefs when selling your own home. This means that many people will unknowingly fall into the new 30-day reporting and payment requirement. If this could apply to you, please let us know.”

Are you thinking of selling your home or another property you own?

Talk to the friendly experts at Re:Accounts. We’ll make sure that the right information is submitted by the deadline involved – and that any tax you owe is kept to a minimum. Selling property is stressful enough – at least you can relax knowing that the tax requirements are taken care of.