Currently, the due date for paying any Capital Gains Tax (CGT) owed to HMRC is the 31 January, following the end of the tax year in which a Capital Gain was made. This deadline will change for UK residents from April 2020. Clients should be advised that this change will mean that any CGT due on the sale of a residential property will need to be reported earlier than is current the case. In addition, a payment on account of any CGT due (an advance payment towards their tax bill) will need to be made within 30 days of the completion of the transaction.
In practice, this change will apply to the sale of any residential property that does not qualify for Private Residence Relief (PRR). The PRR relief applies to qualifying residential properly used wholly as a main family residence. The new deadline will mainly apply to clients who are disposing of a second / holiday home, an investment rental property or a home that does not qualify or only partially qualifies for PRR.
There are also changes to the PRR rules which will see the final exempt period for CGT purposes being reduced from 18 months to 9 months from April 2020. This time period can be extended to 36 months under certain limited circumstances such as the owner having to move into care. This relief applies even if the homeowner was not living in the property when it was sold.
These CGT changes have already come into effect (from April 2019) for non-UK residents. If your client lives abroad and sells a UK residential property, they must inform HMRC within 30 days of the sale. The notification must be made whether or not there is any non-resident CGT to be paid. Any non-resident CGT that is due must be paid within 30 days of the sale.
