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Capital Gains Tax
Capital Gains Tax
As from the 6th April 2020, there are major changes in the way that Capital Gains on residential let of 2nd properties are returned to the Inland Revenue.
At present, if you sell a property that has been let the Capital Gain goes on your Tax Return for the year in which the sale occurs and the tax is paid by the 31st January following that tax year.
For example: property sold 31/10/19, the gain is shown on the 2019/2020 Tax Return and paid by 31/01/21.
After the 6th April 2020, a provisional Capital Gain calculation will need to be submitted to H. M. Revenue & Customs within 30 days of the completion of the sale of an applicable residential property and the tax due will also need to be paid within that 30-day period.
The potential problem with the new reporting system is that you will need to estimate your total income from all sources for the year to establish the amount of gain that will be chargeable at 18% and the amount that will be chargeable at 28%.
Penalties will, of course, be charged if H. M. Revenue & Customs believe you have “grossly” understated the tax payable, or you are late making the declaration of the gain to them, but they have stated that a soft landing approach will be taken in the early years of operation of the new system.
The Capital Gain will still need to be reported on your self-assessment Tax Return with any under or overpayment of Capital Gains tax adjusted for within that Return.
There has been no indication, as yet, of how the in-year reporting of the relevant Capital Gain is to be made.
If you have any queries regarding the above, please do not hesitate to contact our offices on 01869 241782.
