New rules for Capital Gains Tax
The Government is introducing new rules for Capital Gains Tax on property sales. Sarah Cornish, Partner and Head of Wills, Probate and Trusts at Coodes Solicitors, advises on how to prepare for the change, which comes into force in April.
Property owners should be aware of new rules relating to paying Capital Gains Tax (CGT) bills on selling or gifting residential property.
Currently if you owe CGT on a property related transaction you have until the next self-assessment deadline to report on the disposal and pay the tax which is due. This is 31 January following the end of the tax year in which the disposal was made.
Do you need legal help or advice?Talk to us today
From Monday 6th April 2020 new rules come in to force which mean that anyone disposing of certain types of property will be required to submit a residential property return to HM Revenue and Customs within 30 days of the disposal and make a payment on account for the tax which is due.
Which properties are subject to capital gains tax?
CGT is applied to the sale or gifting of certain property, including investments, such as second homes. It is applied even when no money changes hands including when someone gives a property to a family member.Generally CGT is not applicable on the sale or gifting of your main home but there may be CGT on certain types on transaction in relation to your main home, for example, if you were to develop and sell part of the garden or have moved out of the property.
Are you affected by this issue? Do you need legal advice?Contact our team today
Who will be affected by the new rules?
The new rules will affect those selling or gifting properties on which private residence relief is not available.
Anyone considering gifting or selling a property should be aware of the new rules. The new deadline could have cash flow implications. If you are likely to be affected, do seek advice. You may want to try to sell or gift the property before Friday 3rd April, which is the last working day before the new rules come into force.
It is two years since the changes were announced by former Chancellor George Osborne. However, we believe that many taxpayers will be unaware of the new rules and could get caught out. Our Residential Property and Wills, Probate and Trusts teams will be working with clients to ensure they understand the implications of the changing rules.