If you’re planning to sell a residential property from this April, you may need to meet a new 30-day deadline for reporting capital gains tax.

Under current rules, anyone selling additional property that’s not their main home must report the capital gains tax due and make a payment as part of their self-assessment tax return, due on 31 January after the end of the tax year.

From 6 April 2020, that deadline will change so that capital gains tax must be reported and paid within 30 days of the sale going through.

Do you need to report and pay capital gains tax?

Capital gains tax applies to the profit you make when you sell something that’s increased in value.

For residential property, it’s charged at either 18% or 28%, depending on whether you’re a basic or higher-rate taxpayer, on the gain you’ve made.

When you sell your main home, you usually don’t have to pay any capital gains tax because you’re covered by private residence relief for the time you lived there.

But when you sell a property that doesn’t meet the criteria for private residence relief, you might have to report and pay capital gains tax.

For example, this could apply to:

  • holiday homes
  • buy-to-let properties
  • inherited property.

You won’t be charged capital gains tax if you sold the property at a loss, or if the gains you made were within your annual exempt amount, which is £12,000 in 2019/20, or £6,000 for trusts. In 2020/21, this will increase to £12,300 for individuals, and £6,150 for trusts.

You’ll also be exempt if you’re selling to a spouse or civil partner, or if the property is outside of the UK.

What do you need to do?

If the sale of your property comes under the new rules, you’ll need to report and pay any capital gains tax due within 30 days of the completion date. HMRC is launching a new service to allow people to report this online, but the page has yet to be made available to the public.

For the sale of jointly-held properties, each owner must submit a separate form.

If you need to complete a self-assessment return for other tax liabilities, you’ll also need to include the gain when you fill out your return.

If you’re selling a property next month or later and think you might be affected by the new deadline, talk to us for help with working out your capital gains tax liability and completing the new form.

Other capital gains tax changes

Further changes to the way capital gains tax applies to property have been announced for 2020/21, though some have yet to be legislated for.

These include a reduction to the final-exemption period for private residence relief, and a restriction to qualifying conditions for lettings relief.

You can find out more about these in our blog post on how capital gains tax is changing in 2020.

As a Knight & Co client, you’ll have the full support of our team when it comes to your personal tax and finances.

Read more about our personal tax planning services, or get in touch to talk about how we can help you.