Changes to Capital Gains Tax payment for UK property sales

Although these new rules have been in for nearly 2 years they are often overlooked.

From the 6 April 2020 the deadlines for paying Capital Gains Tax after selling a residential property in the UK changed. If you’re a UK resident and sell a residential property in the UK initially you had 30 days to tell HMRC and pay any Capital Gains Tax owed. There were already in place similar rules for those who are non UK resident but this article relates just to those who are UK resident.

Fortunately the deadline was extended to 60 days in relation to sales completed on or after 27 October 2021.

If you don’t tell HMRC about any Capital Gains Tax within 60 days of completion, you may be sent a penalty as well as having to pay interest on what you owe – so it’s important that everyone involved in the sale of a residential property fully understands these changes.

Before the 6 April 2020, you had between 10 and 22 months from the sale to pay Capital Gains Tax, so this is a significant change. The new rules apply to individuals, trustees and personal representatives. Some exemptions are in place with regards to certain sales, for example, the sale of your main residence, which has been used solely as your private residence during the time it was owned. This is because the disposal will be covered by Private Residence Relief.

When you need to report Capital Gains Tax within 60 days.

If you live in the UK, you may need report and pay Capital Gains Tax when, for example, you sell or otherwise dispose of:

• a property that you’ve not used as your main home
• a holiday home
• a property which you let out for people to live in
• a property that you’ve inherited and have not used as your main home But you won’t have to make a report and make a payment when:
• you meet the criteria for full Private Residence Relief
• the sale or disposal was made to a spouse or civil partner
• the gains (including any other chargeable residential property gains in the same tax year) are within your tax free allowance (called the Annual Exempt Amount)
• you sold the property for a loss
• the property is outside the UK

How local firm Seymour Taylor can help

Seymour Taylor have been working with a number of clients on these new rules that came in on 6 April 2020 from HM Revenue & Customs with a 60 day reporting time limit following the sale completion. Any tax payable is also due within the same time limit. These tight  timeframes mean that clients have needed to instruct Seymour Taylor to act for them immediately as it is necessary to start collating information to assist with the calculation of the gain at the earliest opportunity. This gives Seymour Taylor the maximum amount of time possible to fully consider all exemptions, reliefs and costs that could be claimed and thus minimise any tax payable for the client. Given the limited time now available following the sale of the property this extra time is very important.

Following agreement to any draft calculations the necessary Return if managed promptly can be filed with HM Revenue & Customs within the 60 day time limit. This new change means it is important to act quickly, ideally before a sale is completed, to collect together all relevant information as 60 days from the sale is not a great deal of time.

For more details or if you would like a FREE no obligation consultation, a quote or have any questions on the Capital Gains Tax for the sale of a residential property then please use the details below to contact Seymour Taylor. Consultations and meetings can also be arranged virtually.

T: 01494 552 100 E: enquiries@stca.co.uk W: www.stca.co.uk

Information correct at time of going to print January 2022.