If you’re a self-assessment taxpayer, there are some important changes to capital gains tax (CGT) you should be aware of.

The new rules, introduced on 6 April 2020, apply to all UK residents who sell a residential property in the UK that is not their main home and make a capital gain with tax to pay.

What are the new CGT rules?

If you’re a UK resident and you sell a UK residential property that isn’t your main home and CGT is due, you should use HMRC’s online service to report the sale and pay the tax due within 30 days of completion.

You should also use the online service if you’re a non-UK resident disposing of UK land and property, regardless of whether there is a gain or not.

The new rules affect you if you’re a landlord or property developer selling on part of your residential property portfolio, or if you’re a UK resident who sells a second home.

You won’t be affected if you sell a UK property that is your main residence.

Don’t risk a penalty

As of 6 April 2020, if you don’t report gains on property within the 30-day time limit, you may be liable to a late filing penalty. And if the tax isn’t paid within the same time limit, you may have a late payment penalty and be subject to late payment interest.

What about self-assessment?

You should still tell HMRC of any CGT liabilities on your 2020 to 2021 self-assessment tax return. But any payments you’ve already paid won’t count towards your annual tax return bill.

You will continue to complete your tax return as you do now for any other capital gains tax declarations in the future. You’ll pay tax on any profit, above your tax-free allowance, when you sell:

  • Most personal possessions worth over £6,000, apart from your car
  • Your main home, if you have let it out or used it for business
  • Shares
  • Business assets

Deadline approaching for 2019/2020 self-assessment

The 2019 to 2020 tax year is the last year UK residents will use the self-assessment process to pay capital gains tax for the sale of second homes in the UK.

That means you have until 31 January 2021 to declare any profit made from selling a UK residential property, which wasn’t your main home, during the 2019 to 2020 financial year, and pay the CGT that is due.

Need help with your tax?

At Churchill Taxation, our experienced team of tax advisers can provide you with help and advice on a range of tax matters, including self-assessment tax returns and capital gains tax.

Call us today on 07813 434195 or send an email to stephanie.churchill@churchilltaxation.co.uk

Steph Churchill

Stephanie Churchill

Managing director & co-owner of Churchill Taxation