Capital gains tax payment date

Current Rule

Currently any capital gains tax is recorded on an individual’s personal tax return and the tax is payable on the 31 January following the end of the tax year (the 5 April). 

New Rule

From 6 April 2020, within 30 days of completion of sale, it will be necessary to submit a provisional calculation of the gain to HMRC and pay the tax that is due.  Ultimately the gain will still be recorded on your self-assessment tax return and any over/under payment of tax dealt with accordingly.  If tax is overpaid, then this will not be repayable until the tax return is submitted.

Reduction in taxable gain due to final period of ownership

Current Rule

Currently the last 18 months of ownership of the property are treated as qualifying for principal private residence (so this part of the gain is exempt from tax). 

New Rule

From 6 April 2020 tax relief will only be provided for the final 9 months of ownership therefore halving the relief. (Note the rules used to allow relief for the last 3 years of ownership but this was reduced to 18 months in 2014).  

Potential loss of £40,000 letting relief

Current Rule

Currently if you sell a residential property which was at one time your main residence but has then been rented out, it is possible to deduct ‘letting relief’ of up to £40,000 from any capital gain. 

New Rule

This relief will no longer be available unless the letting of the property occurred while the owner was living in the property.  

This relief will therefore no longer be available to the vast majority of disposals.

What can be done?- Consider selling property the before 6 April 2020- If there are future plans to gift a family member your property, consider this before 6 April 2020- Consider transferring property ownership jointly with your husband/wife- With only 30 days to calculate and pay tax, ensure all information is readily available.