Advice

Further changes to Capital Gains Tax (CGT)

In our last Newsletter we highlighted the likely changes to CGT principal private residence relief and lettings relief. It is now confirmed that as from 6 April 2020, the final period of exemption on the sale of a main residence will be reduced from 18 months to 9 months. The change will not affect those who are currently living in or are about to move into a residential care home and disabled home owners as the current period of exemption of 36 months will remain. Meanwhile lettings relief which currently covers gains of up to £40,000, will only be available where homeowners share their property with a tenant.

The other change which we would like to highlight to clients is that as from 6 April 2020 there will be a change as to when payment of a CGT liability has to be made. At present when you sell a property and make a capital gain, you have until 31st January in the year after the tax year you have made the sale, in which to pay the CGT bill. For example, if you made a taxable capital gain from a property sale in May 2018, you would not have to pay this tax liability until 31st January 2020. However, from 6 April 2020 the general rule will be that within 30 days (NB later modified to 60 days) of the completion of a disposal of a UK residential property by an individual, trustee or personal representative, a return (‘residential property return’) and a payment on account must be made in respect of the disposal. Please note that this change only relates to the sale of residential property and the existing rules regarding payment of a CGT liability on the disposal of all other assets shall prevail.