The deadlines for paying Capital Gains Tax after selling a residential property in the UK are changing from 6 April 2020. Here’s what’s changing and what you’ll need to do.
What is Capital Gains Tax?
Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.
From 6 April 2020, if you’re a UK resident and sell a residential property in the UK you’ll have 30 days to tell HMRC and pay any Capital Gains Tax owed.
If you don’t tell HMRC about any Capital Gains Tax within 30 days of completion, you may be sent a penalty as well as having to pay interest on what you owe - so it’s really important that everyone involved in the sale of a residential property fully understands these changes.
When you need to report Capital Gains Tax within 30 days
You may need to make a Capital gains Tax report and make a payment when, for example, you sell or otherwise dispose of:
a property that you’ve not used as your main home
a holiday home
a property which you let out for people to live in
a property that you’ve inherited and have not used as your main home
But you won’t have to make a report and make a payment when:
a legally binding contract for the sale was made before 6 April 2020
you meet the criteria for Private Residence Relief
the sale was made to a spouse or civil partner
the gains (including any other chargeable residential property gains in the same tax year) are within your tax free allowance (called the Annual Exempt Amount)
you sold the property for a loss
the property is outside the UK
HMRC are launching a new online service to allow you to report and pay any Capital Gains Tax owed.