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Changes To Capital Gains Tax For Residential Property Landlords

From 6 April 2020, there will be new rules to the way you report capital gains on disposals of residential property and how these gains are calculated. We have detailed the changes you need to be aware of below.

Disposals of residential property on, or after, 6 April 2020 will need to be reported to HMRC on a Capital Gains Tax (CGT) return within 30 days of the completion of the sale. A payment of the estimated tax due will also need to be made within 30 days of the sale.

Reasonable estimates will need to be made when calculating the tax due, as the disposal will need to be reported during the tax year. Failure to meet the filing and payment deadlines will result in interest and penalties being charged.

Although there are exemptions to the requirement to file a return including where the gain is fully covered by Private Residence Relief (PRR) and where no tax is payable on the disposal, these are limited.

An amended CGT return, or your self-assessment tax return, can be used to provide final figures once your other income and gains for the year of disposal are known. Our Property Taxperts can assist with the completion of your return and the initial reporting to HMRC, please get in touch to discuss your own circumstances.

The changes to the calculation of gains comes into effect when an individual sells their only or main residence, as the gain may be exempt if the whole period of ownership qualifies for PRR, you can read our previous article on the changes to PRR coming into force from 6 April 2020 here.

Providing the property has been your PRR at some point during the period of ownership you may also qualify for letting relief if the property has been rented out. The letting relief can further reduce the capital gain chargeable to CGT with the maximum of up to £40,000 per owner (i.e. £80,000 for a couple who jointly own a property).

However, there are changes to who can claim letting relief coming into force from 6 April that you need to be aware of, as mentioned in our previous article.

All of these upcoming changes will be in force in just over a month, so you need to make sure you understand the new rules if you are disposing of a residential property from 6 April 2020.

Our Property Taxperts act for over 1,000 landlords and are here to guide you through the process of disposing your property. Please get in touch to discuss your own circumstances by emailing [email protected] or calling our EQ Taxperts today.

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