Changes to Capital Gains on Property

When you sell an asset, the profit you make on that sale can be subject to Capital Gains Tax (CGT). Historically all such gains have been reported on self-assessment tax returns. Any CGT arising has then been due for payment on the 31 January following the tax year end. From 6 April 2020 this will no longer be the case for sales of residential property. After that date, CGT will be due on these disposals within 30 days of the sale date instead. A new online property disposal return is being created by HMRC to enable taxpayers to report sales and calculate the CGT due. Where there has been no gain, or the gain is small enough to be covered by exemptions, no return will be required. Because CGT is partly dependent on other income and asset sales in the same tax year, there will be some element of estimation in calculating the amount due. The tax will be recalculated when the self-assessment return is prepared, with the amount already paid treated as a payment “on account” for tax in that year. This does mean that the CGT paid would ultimately be correct, but it would be prudent to take professional advice on such disposals regardless to minimise cashflow issues. If you would like us to help you with tax on your property portfolio, please call us on 01892 807001.