17 February 2020

There are major changes to Capital Gains Tax (CGT) reporting requirements on the disposal of residential property which come into play on 6 April 2020.

As the rules currently stand, UK resident personal taxpayers must pay any CGT arising from the disposal of residential property by 31 January of the tax year following the year disposal is made. In some cases, this can mean the taxpayer has 22 months before they need to report the gain and pay the CGT.

In an effort by HMRC to collect CGT arising from such disposals more efficiently, the reporting and payment window will be reduced to 30 days.

So what does this mean for you?

If you are selling your home and are able to benefit from the private residence relief in full, then these changes will not affect you. The new reporting requirements only apply where the capital gain arising is taxable and therefore will have more of an impact on those taxpayers selling second homes or rental properties.

Given the short reporting window available, taxpayers are encouraged to familiarise themselves with their personal asset information which will be needed in order to complete any CGT return required. If this information needs to be updated, then this should be done in advance of the disposal as failure to meet the reporting deadline will lead to interest and penalties being charged.

If the taxpayer has an adviser, providing sufficient notice of any planned disposal will allow their adviser an opportunity to update records, gather all relevant information and consider whether any reliefs are available before calculating the correct amount of CGT payable.

If you wish to discuss these changes further, our Wills, Estates and Succession Planning team would be delighted to assist you.

For more information, please contact a member of our Wills, Estates & Succession Planning team.