From 6 April 2020, the time period to report and pay any capital gains tax due on UK residential property sales is significantly reducing. Currently, if you owe capital gains tax from the sale of a property you have until the 31 January following the end of the tax year the sale fell into to declare the disposal and pay any of the tax owed.
However, from 6 April 2020 anyone who makes a taxable capital gain on the sale of a UK residential property will only have 30 days from the completion of the sale to declare and pay any tax due.
As a result, this means that the time for tax planning and to calculate, report, and pay any capital gains tax has been cut very short, therefore it will be beneficial to think about this before the completion of any sale to ensure that everything needed is put together in plenty of time to submit the residential property return.
Capital gains tax does not apply to your main home, so for most people, this change will not affect them. However, if you have moved out of the ‘main home‘ property for a period of time before the sale (i.e. through a divorce or if you have moved into a new home before the sale occurs) another change needs to be taken into account.
From April 2020 private residence relief is reducing from 18 months to 9 months, therefore if you moved out of the property more than 9 months before the sale, some capital gains tax will arise, even if the property was originally your main home.
If the property has been empty due to the owner moving into a care home the private residence relief will remain at the current 36 months.
Are you from the Birmingham, West Midlands, or Shropshire area? Are you interested in help with your tax planning? Click here to contact Hollingsworth and Co.