HM Revenue & Customs (HMRC) have introduced new rules on the disposal of residential property (other than your main home) that will apply to all disposals from 6th April 2020.
* A return must be submitted, and any Capital Gains Tax (CGT) paid, to HMRC within 30 days of the completion date for each residential property sale where a CGT liability arises.
* The returns will be submitted through a new digital CGT on Property Service.
* Clients will need to set up a CGT Disposal Account with HMRC when a disposal is made and obtain a reference number for the disposal from HMRC.
* If a self-assessment tax return is due for the year, the property disposals and CGT due will be included in those returns also. Any CGT paid in the year will be treated as a Payment on Account towards the final tax liability.
In addition, HMRC are making two additional major changes to available reliefs –
* Principal Private Residence relief – The final period exemption (a deemed period of occupation for properties that have been occupied as a main residence) is being reduced from 18 months to 9 months.
* Letting Relief – This is currently available where all or part of the owner’s main residence is let for residential purposes. From 6th April 2020 this will only be available when the property is also occupied by the owner, which, in many cases, will mean that the relief is no longer available.
It is important that clients provide us with all information when disposing of a property as soon as possible so that any CGT liability may be correctly reported, and the return submitted to HMRC by the due dates (30 days from completion date).