Conveyancers To Prepare For Changes To Capital Gains Tax Deadlines
Conveyancers need to be prepared for the changes to Capital Gains Tax (CGT) on clients’ second homes.
The deadlines for paying CGT once a residential property has been sold in the UK will change from 6th April 2020.
From 6th April, a UK taxpayer resident who sells a property in the country they reside in will have one calendar month (30 days) to inform HM Revenue Customs (HMRC) and pay any CGT which they owe.
Those selling second homes who fail to advise HMRC about any CGT within 30 days of completion, may be penalised and would also possibly have to pay interest on what they owe.
Therefore, it is important that conveyancers fully understand the changes and make their clients aware of the CGT deadline variation – to make sure all those involved in the transaction is completely aware.
HMRC stipulates below when you need to report CGT within 30 days.
A CGT report will need to be undertaken and payment made when, as way of an example, you sell or otherwise dispose of:
- a property that has not been used as a main home;
- a holiday home;
- a property which has been let out for people to live in;
- a property which has been inherited and was not used as a main home.
However, a report and payment does not need to be made when:
- a legally binding contract for the sale was made before 6 April 2020
- the criteria for Private Residence Relief has been met
- the sale was made to a client’s spouse or civil partner
- the gains (including any other chargeable residential property gains in the same tax year) are within a tax free allowance (called the Annual Exempt Amount)
- the property was sold at a loss
- the property is outside the UK
Furthermore, HMRC confirmed they will be launching a new online service which allows taxpayers to report and pay any CGT owed.