New Guidance for CGT on House Sales

Selling property is not as simple as it used to be. With tighter rules being enforced by HMRC over the last few decades sellers need to be aware of these changes and how they are affected, particularly when concerning the disposal of UK residential property.

A UK residential property refers to land which included occupation or dwelling at any given time such as a freehold property. Most of the time residential property gains can be found in the disposal of an investment property, for example a house you rent out. To the relief of a number of homeowners, not all property disposals are chargeable for CGT. Typically this tends to be properties which have been the main residence of the owner during ownership or properties which were bought with the intention of development and resale. In the case of the latter, this transaction is seen as one which is trading in nature as profits are subject to Income Tax. Otherwise CGT rules apply. It should be noted that all your capital gains in a year are added together, however there exists an annual exemption of £12,300.00 of which capital gains below this amount are not taxed.

On 6 April 2020 the deadlines for filing and paying CGT off the disposal of a UK property changed. This affected both UK residents and non-UK residents who own residential property in the UK. Under new rules, residents must take no longer than 30 calendar days to inform and pay HMRC for the disposal of property. Disposals of other CGT chargeable assets are unchanged and must follow the standard Self-Assessment deadlines. Furthermore, disposals represented by charities, pension scheme investments and lease granted for commercial purposes.

For UK Residents, disposal of property making gain which is liable to CGT must be informed of to HMRC as well as the payment of owed CGT. This must be done within 30 days of property disposal using the new online service, which can be found here:
UK residents with property abroad do not need to worry about this notice period, as rules on this matter are unchanged.

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