From 6 April 2020, if you’re a UK resident and sell a residential property in the UK you’ll have 30 days to tell HMRC and pay any Capital Gains Tax owed.
If you don’t tell HMRC about any Capital Gains Tax within 30 days of completion, you may be sent a penalty as well as having to pay interest on what you owe - so it’s really important that everyone involved in the sale of a residential property fully understands these changes, which affect both UK and non-UK residents.
Capital Gains Tax
Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.
When you need to report Capital Gains Tax within 30 days
If you live in the UK, you may need report and pay Capital Gains Tax when, for example, you sell or otherwise dispose of:
- a property that you’ve not used as your main home
- a holiday home
- a property which you let out for people to live in
- a property that you’ve inherited and have not used as your main home
But you won’t have to make a report and make a payment when:
- a legally binding contract for the sale was made before 6 April 2020
- you meet the criteria for full Private Residence Relief
- the sale or disposal was made to a spouse or civil partner
- the gains (including any other chargeable residential property gains in the same tax year) are within your tax free allowance (called the Annual Exempt Amount)
- you sold the property for a loss
- the property is outside the UK
New online service and updated guidance
HMRC will launch a new online service to allow you to report and pay any Capital Gains Tax owed.
Guidance will be fully updated in April 2020, which will include information on how to access and use the online service.
If you’re a non-UK resident you must continue to report sales or disposals of interests in UK property or land, regardless of whether there is a Capital Gains Tax liability within 30 days of completion of the disposal.
You will no longer be able to defer payment of Capital Gains Tax via your Self Assessment return, and any tax owed must be paid within the 30-day reporting and payment period.
This includes disposals of residential properties, non-residential properties and indirect disposals.
From 6 April 2020 non-UK residents will be able to use the new online service, which will replace the current reporting service.
Advice for agents
If you act as an agent for a customer who disposes of a UK residential property you will need to:
- register with Agent Service
- ensure that any Capital Gains Tax liability due for your client is reported and paid for within 30 days of completion of the disposal
The service will allow you to see previous submissions and amend if necessary.
If you are a trustee who sells or disposes of a UK residential property held in a UK resident trust you must ensure that any Capital Gains Tax liability due is reported and paid within 30 days of the completion of the disposal - in the same way as for UK resident individuals.
If you are a trustee, or an agent acting for a trustee, you will need to register the trust on the Trust Registration Service to get a Unique Taxpayer Reference (UTR).
If you are waiting for a UTR, you can use the Temporary Reference Number to access the new Capital Gains Tax Service. If you have already registered the trust you will be able to use your UTR to access the new online Capital Gains Tax service.
If you are a trustee who sells or otherwise disposes of a residential property or commercial property held in a non-UK resident trust, or makes an indirect disposal, you must ensure that any Capital Gains Tax liability due is reported and paid within 30 days of completion of the disposal - in the same way as for non-resident individuals.