Earlier this year, a new rule requiring capital gains tax on UK residential property to be reported and paid to HMRC within 30 days kicked in.
This ushered in another change to tax rules affecting residential property owners, which seeks to raise more tax from the disposal of additional homes and to collect this tax quicker.
For many of the 1.2 million disposals of residential property in the UK each year, there will be no capital gains tax liability due to private residence relief. This applies if the residential property is your home and it’s been solely used as your private residence during the time it was owned.
But many buy-to-let landlords, second homeowners or accidental landlords are in the firing line when it comes to being a target of this tax change.
Should you make a gain on the disposal of additional residential property in 2020/21, the 30-day rule will require this tax to be paid considerably earlier. Failure to do so could result in penalties and interest on any late-paid tax.
Although this article is written from the perspective of an individual taxpayer, the same principles will now also apply to trustees who sell or dispose of a UK residential property held within a trust.
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The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.