From the 6th April 2020, most individuals (not companies) who sell a house or flat on which capital gains tax (CGT) is due, will have to “pay and file” within 30 days of completion.

As well as landlords who own domestic property for rental purposes, the new measures will apply to individuals who have been absent from their principal private residence during the period of ownership, maybe working away from home. Divorce or separation may also have an impact.

The capital gains tax on the disposal of the house or flat will have to be paid within 30 days of the completion of sale. At the same time, the seller will have to submit a new CGT return, giving full details of the disposal and the resulting CGT due.

You will only have to submit a return if there is CGT to pay on the disposal but if you have more than one disposal in the

tax year, you may have to submit more than one return, each with its own 30 day deadline.

 

The new measures will apply to:

• Rental properties (non-commercial)

• Second homes

• Overseas houses and flats

• Disposals of homes where the Principal Private Residence relief (PPR) is restricted for some reason.

Effectively, payment of CGT on a non-PPR property will become a two part process with the initial pay and file part completed within the 30 days following completion of sale and then a year end reconciliation either on your self assessment return by 31 January following the end of the relevant tax or on the pay and file service to adjust any estimates and confirm the figures and the final tax liability.

Penalties for late filing of these returns follow the self-assessment penalty regime, meaning an initial £100 penalty for late

filing and further penalties dependant on how late the submission is made. Interest will also be charged on any outstanding liability. You will need to act quickly to meet the 30 day deadline. It would make sense, if you are planning on property disposal to seek further advice so you can make the necessary planning to ensure your figures are assembled in good time.

Regal Estates