Selling a property after 6th April 2020? You need to read this
On the 6th April 2020, changes to capital gains tax on property were rolled out. Mostly affecting landlords or those with second homes, the widespread changes were a little lost in communication during the noise of the COVID-19 pandemic.
The short version; If you’ve sold a residential property you do not live in, and made a profit on that property? You may have to pay Capital Gains Tax.
This occurs most often when you sell a buy to let property. The profits you’ve made come in over your ‘annual allowance’. In the 20/21 tax year, this is £12,300.
If you have a ‘capital gain’ to pay on a residential property, you need to report this to HMRC within 30 days of completion (EDIT: As of 27th October 2021, this is 60 days).
You can do this online. Any tax owed has to be paid within 30 days (EDIT: As of 27th October 2021, this is 60 days).
Capital Gains Tax Rates remain at 18% or 28% at time of writing.
This is higher than other capital gains tax rates – it appears HMRC isn’t keen on your extra properties!
Do the changes to capital gains tax on property in 2020 affect me if I’m selling my main residence?
In short, no.
If you are a UK resident for tax purposes, and the property you have sold has always been your primary residence, you do not need to pay any tax. As a result, you don’t have to report anything within 30 days.
If you are a non-resident however, the 30-day rule applies.
You can do this on the HMRC website HERE.
One other thing to mention is that if you have a tax return normally, in most cases involving property sales, you will need to report this on there even if you’ve not exceeded the annual allowance of £12,300.
If you’ve made a loss it is useful to log this on your tax return for later use against any gains.
If you’ve disposed of other items in the tax year that have made a gain, you may want to offset any losses you’ve made against those gains.
This is a big change, so if you know anyone who has property please share this with them.
If you’d like to chat through your situation, or have a gain to report, please get in touch.