From April 2020 the rules surrounding capital gains tax on the sale of residential property will be changing, are you prepared?
The proposed changes were announced by former Chancellor Phillip Hammond in the 2018 Budget and are due to come into effect on 6th April 2020.
The main changes relate to:
- Timescale for payment of Capital Gains Tax.
- Lettings Relief.
- Private Residence Relief.
Timescale for payment of Capital Gains Tax
From 6th April 2020, UK residents selling residential property where capital gains tax is due will be required to pay capital gains tax sooner.
At present, the details of the residential property sale must be recorded on the taxpayer’s self-assessment tax return and then paid by 31st January of the following year.
The new rules state that CGT must be paid within 30 days of the completion date.
The changes to lettings relief could have a big impact on people who let out properties that they have previously lived in.
Currently, it is possible in some cases to claim lettings relief on the sale of a property that you have previously lived in.
Under the new rules, lettings relief will only be available to those who rented out part of their property whilst also using it as their own main home.
Private Residence Relief
Private Residence Relief can currently be claimed for the full period that the taxpayer lived in the property, plus the final 18 months of occupancy. From April 6th 2020, the 18 months will be reduced to just nine months.
For help or advice with capital gains tax or personal tax planning, give our team of experts here at Michael Bell a call on 01484 690 730 and we’ll be happy to help.