Owners of second homes or buy-to-let properties must brace themselves for a seismic shift in how capital gains tax is paid, on top of the rule changes for non-residents who own UK property. We mentioned some of these upcoming changes in a previous article.
New rules are set to kick in for people who exceed the capital gains tax-free threshold by selling residential properties from 6 April 2020. The rules do not apply to the sales of main residences, which are usually covered by private residence relief.
Gains that are liable to the tax from an additional residential property sale must submit a new online capital gains tax return. Furthermore, any capital gains tax owed from the transaction needs to be paid within 30 days of the sale going through.
Taxpayers currently have until the self-assessment deadline after the tax year the sale was completed to send in a return and pay any tax. Depending on the time of the sale or disposal, capital gains tax could be due any time between 10 and 22 months after the deal was done.
From the spring, the new 30-day payment window will mean taxpayers have considerably less time to report the gain and pay the tax. Rather than thinking about an annual compliance process, property owners need to have their records up to date in advance of the sale so that the 30-day deadline can be met, and penalty charges avoided. More details, possibly in the Spring Budget on 11 March, are expected before the changes come in.