Dramatic changes to reporting and paying capital gains tax from 6 April 2020
Legislation has been enabled to dramatically bring forward both the reporting of and the payment of capital gains by private individuals on sales of residential property from the 6th April 2020.
For personal taxpayers currently capital gains tax (CGT) is paid in January following the end of the tax year when it was sold, and allows between 10 and 22 months for calculation, reporting and payment.
From 6th April the CGT will have to be calculated, reported and paid to HMRC within 30 days of the completion date.
This acceleration of the payment of CGT is estimated to bring forward up to £8 billion of tax for the government.
Buy to let property owners will be subject to these changes and agents, solicitors and accountants should be aware of these CGT changes and ensure that they advise their clients appropriately. Experience would tell us that establishing original costs can take some time for many people and they should seek to obtain that before the sales process in order to meet the reporting deadline.
Most residential sales will be for the main residence of the owner and this will not apply to them. However, absence working abroad or elsewhere in the UK, divorce or separation and other common issues in families today may effect entitlement to relief.