New 30-day window to report and pay residential Capital Gains Tax

January 20th, 2020

As of 6th April 2020, all buy-to-let landlords and other property owners will have just 30 days to report and pay any Capital Gains Tax owed on the sale of a residential property.

This represents a significant shift from the present-day rules, which in some cases see property owners having up to 22 months after the disposal took place to declare and pay any taxable gains. Currently, owners do not have to report or pay any Capital Gains Tax owed until the next deadline for submitting a Self-Assessment Tax Return – usually on 31st January of the tax year following the year of the disposal. Once the changes come into effect, property owners will have to submit a one-off return to HMRC and pay whatever tax is due within 30 days of the sale completion date.

The changes only apply to properties sold on or after 6th April 2020. Any properties that have exchanged contracts in the current 2019/20 tax year, but then complete on or after 6th April 2020, will remain exempt from the new 30-day filing window.

Failing to meet the new 30-day deadline will attract an initial £100 penalty, which continues to rise after three, six and 12 months. Late payment of any tax incurs an additional penalty, which is 5% of any tax unpaid at 30 days, six months and 12 months.

To meet the deadline, property owners must have their records are in order ahead of the sale to maximise the 30-day window in which to calculate the Capital Gains Tax owed, report the gain and pay what is due.

It’s yet to be seen whether we will see a surge in owners looking to dispose of properties ahead of the new tax year reforms.

The change also coincides with further reforms to the property tax market, which sees the tax relief available on mortgage interest payments fall to 0% from 6th April 2020.

With less than three months to go until the reforms become UK law, property owners must have their house in order when approaching a sale. To understand how the changes will impact your property portfolio, contact David Herd on or 0161 703 2500.

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