New rules from HMRC will mean that buy-to-let landlords and second homeowners will have to make capital gains tax payments sooner than they might otherwise have expected. If you are planning to sell a property that you have let or a second home, it would normally need to be reported to HMRC using a self-assessment tax return or using the online “real time” tool for reporting. This means that the tax due needs to be paid by January 31 of the following tax year, which gives you between 10 and 22 months after the sale of their property before you need to pay the tax.
HMRC has concerns about how long it could take before capital gains tax is paid, so they have decided to change the rules from April 2020. Individuals and trustees disposing of a residential property will be required to make a payment on account, much like the rule for self-assessment income tax. This payment will need to be made within 30 days of the sale of the property. If you’re planning on selling, you’ll need to calculate and report the capital gains tax that you think is due and pay within the 30 days.
The remaining changes, which reduce the final period of ownership for private residence relief and in practical terms abolish letting relief are still to be legislated for.
If you have any queries please contact Jackie or Andrew.