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Important Tax Update: UK Land Disposal Returns

Posted: February 5, 2020

New legislation introduced means that any UK resident selling an interest in property which gives rise to a tax liability will have to submit a new Capital Gains Tax Return.

Under the existing rules, UK taxpayers normally have until 31st January in the year following the tax year ending 5th April to submit details of any gains made on UK property and to pay the tax thereon.

With effect from 6th April 2020, UK tax payers will now have only 30 days from the date of completion to file the new Return and pay over the estimated tax.

Capital Gains tax rules for properties are not always straight forward, particularly if the ownership history is complicated or if the property has been used as the main residence for a proportion of the ownership.

UK taxpayers will still be required to submit a Self-Assessment Tax Return to record the gain as normal to finalise the tax payable, so this change represents an increased administrative burden as well as an acceleration of the tax. This is also in the context of the changes previously announced to restrict Principal Private Residence Relief (PPR) and Lettings Relief – both of which also take effect from 6th April 2020.

Please note that the new reporting and payment requirements do not affect those selling a property if there is no tax payable due to; PPR, the availability of previous losses or an individuals Annual Exemption (currently £12,000).

The current rate of Capital Gains Tax for residential property is 18% or 28% depending on your level of income, so the tax involved could be significant. There are also likely to be penalties and interest for late filing and/or late payment of the tax.

If you are unsure or would like to discuss a potential tax charge, please contact our tax team at tax@burgesshodgson.co.uk or call 01227 454627.