Tax Insight: disposing of UK property

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The Requirements

UK resident individuals, trustees and personal representatives who realise a taxable gain on the disposal of UK residential property now need to report their disposal within 30 days of completion and pay any Capital Gains Tax (CGT) due within the same time frame.

Similar reporting requirements have been in place for non-UK residents disposing of UK residential property since April 2015. Now, however, non UK residents who are Self-Assessment taxpayers can no longer defer the payment of CGT until their normal liability for the year becomes due. Instead they are required to report the disposal and pay the CGT liability within 30 days of completion.

How to report your property disposal

HMRC has introduced a new online service to allow taxpayers to report their UK residential property disposal and pay any CGT due. The taxpayer must create a personal tax account online in order to access the new service. Through this, they can authorise an agent to file and amend the CGT Return on their behalf.

A calculation is required alongside the submission of the CGT Return to estimate the payment on account of CGT due. A reasonable estimate of income levels will also need to be established, as this may affect the rate of CGT payable.

The tax may need to be adjusted if all the information was not available initially and to take account of the final position for the year. This will normally be done by inclusion in the Self-Assessment Tax Return.

Changes to Main Residence Relief

Since 6 April 2020, Main Residence Relief has changed. For any property that has at any time been the taxpayer’s main residence, the final period of exemption is reduced from 18 months to just 9 months.

Special rules continue to apply for those with a disability or those in residential care where the final period of exemption is 36 months.


Lettings  Relief

Since 6 April 2020, Lettings Relief applies only if the ‘homeowner has been in shared occupancy with the tenant.’ There are no transitional rules in place meaning that periods of letting before 6 April 2020 will not qualify for relief. As a result, affected individuals could lose up to £40,000 relief or up to £80,000 for couples.

How can we help?

The changes have accelerated the reporting and payment dates for individuals, trustees and personal representatives disposing of UK residential property that is not wholly protected by Main Residence Relief. It is important to ensure you are prepared for the
new rules.

Here at PKF Littlejohn, our expert team can help you with the application of these changes to your affairs and the reporting of your disposals.

For further information or to arrange a meeting with our expert team today.

Written by Jonathon Collins, Phil Clayton and Shaharan Deen in our London office