Pay Capital Gains Tax on property in 30 days

From 6 April 2020, Capital Gains Tax (CGT) due on the disposal of residential properties will be payable within 30 days of the completion date. This is another step in the acceleration of tax payment dates for CGT due on gains arising from UK property (Finance Act 2019 Schedule 2).

UK landlords

In 2018, the government proposed that CGT would be payable within 30 days of the completion date for all UK residential properties disposed of by a UK resident. This change was due to come into effect on 6 April 2019 to coincide with the new non-resident capital gains tax (NRCGT rules), but it was delayed until 6 April 2020.

The full amount of CGT will be payable within 30 days, alongside a new online property disposal return. This is not yet available but could be similar to the existing non-resident property disposal form (NRCGT return): https://www.tax.service.gov.uk/shortforms/form/NRCGT_Return

If there is no gain to report or the gain is covered by exemptions or losses, the taxpayer won’t have to complete a property disposal return. It seems a lesson has been learned from the hundreds of late-filed NRCGT returns which reported little or no gain.  

If there is a taxable gain to report, the taxpayer must calculate the CGT due taking into account their annual exemption for the year and guess at the correct rate of CGT to apply (18% or 28% based on 2019/20 rates).

After the end of the tax year, the taxpayer will complete their self assessment tax return, including the property gain. Once their full income, gains and losses for the year are calculated, the true amount of CGT will be ascertained and the payment already made within 30 days of the property disposal will be deducted. This could result in a repayment of CGT for the taxpayer. 

It is therefore important to advise your accountant of any residential property sales as soon as they are agreed, so they can help you calculate the CGT that will be due within 30 days of the completion date.

If you would like to talk more in more depth about this please call or drop me an email.