Since the introduction of self assessment back in 1997, UK resident individuals have been required to report disposals of property on their annual tax return and pay over any Capital Gains Tax (CGT) due by 31 January following the end of the tax year. A new regime will be introduced from April 2020 which will drastically shorten the window for both reporting such disposals, and paying over the CGT.
A new ‘UK land return’ must be filed with HMRC within 30 days of a property disposal, with the CGT being payable by the same date. The new return is in addition to the existing tax return, and so the disposal must be reported again when the individual completes their normal self assessment tax return at the end of the tax year.
The new rules will apply to disposals of UK residential property by UK resident individuals. Non-UK resident individuals have been required to file similar returns on the disposal of UK residential property under these strict time limits since April 2015, but the new rules will also now extend this to any disposal of UK land or property by a non-UK resident.
In year reporting will bring with it many complications, such as deciding which rate of CGT will apply based on your expected income for the year, dealing with multiple disposals in the same tax year, utilisation of capital losses, and claiming relief which may not be quantifiable until after the event (such as an EIS investment).
If you are intending to sell a residential property, it is essential that you get in touch with us as soon as possible so that we can ensure all the necessary information is available to file the return, and calculate the CGT payable within the 30 day time frame. Now would be a good time to make sure the acquisition history, including any required valuations, and usage of your residential properties is documented to reduce the administrative burden on a future disposal when time is ticking.
If you have any questions about the new regime and what it means for you then please get in touch.