From 6th April 2020, if you sell your house or flat you may have to file a CGT return and pay what's due within 30 days ...
Initially, it was rumoured that solicitors and conveyancers would complete the new CGT returns themselves and even deduct the tax due from the sale proceeds, but this isn’t going to happen now.
If you find yourself in the position of having to pay Capital Gains Tax (CGT) on the sale of your investment house or flat, you must file a CGT return and pay within the deadline or you will suffer penalties and interest. Note that there are exceptions that apply for example if the property being sold qualifies as your main residence.
There are some important facts to note with this new legislation:
- It applies to any residential property in the United Kingdom
- If there is a mix of uses (residential and commercial) then you must proportion and declare the residential element
- A return is only necessary when Capital Gains Tax is due
- A return (and payment) is due for each disposal. So if two houses are sold and CGT is payable, there are two return filings and two payments
- The disposals still need to be disclosed on the annual self-assessment tax return, which will include a reconciliation of the tax paid and payable
Although the housing market has stalled due to the Coronavirus pandemic, it will pick up again after lockdown with many buyers and sellers eager to move quickly.
The legislation has been in place for a while now, so it will apply to any disposal from the 6th April 2020. Be warned, and be sure to find out if you will need to file a Capital Gains Tax return.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.