Today' STEP article highlights the forthcoming changes to the reporting and payment of capital gains tax in respect of property disposals.
Capital gains tax can arise on the disposal of a property whether by gift or sale when the owner has not occupied it throughout their period of ownership as their main residence. The most common examples of this are holiday homes, rental properties and homes purchased for occupation by family members.
Previously tax only had to be paid by 31 January following the end of the tax year in which the disposal took place. So for a house sale in June 2019 the owner has until 31 January 2021 to pay the tax. Plenty of time to save up!
However, from April 2020 these rules are changing and owners will now have to report the sale and pay any tax due within 30 days of completion. This applies even if the property is gifted for nil consideration.
Conveyancing solicitors are on the front line as far as these transactions are concerned and clients should have a reasonable expectation that at the very least they will be advised to speak to a tax specialist if they have any doubts as to their filing requirements.
In addition HMRC are planning a substantial advertising campaign in order to bring the changes to the public's attention, and so avoid the embarrassing volte face that occurred when numerous non-residents successfully appealed against late filing penalties on the grounds that they were unaware of changes to the tax regime which applied to them. How successful this will be remains to be seen.
UK taxpayers to be given special warning of 30-day CGT payment deadline for property disposals