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Update On Capital Gains Tax And Property

Where are we now?

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Posted by Helen Beaumont on 29/04/2020 @ 8:00AM

This week, I thought I would summarise the changes announced to Capital Gains Tax Relief for your Principal Private Residence that came into force on the 6th April 2020 ...

Be careful of the changes to Capital Gains Tax that came in on the 6th April 2020!

Be careful of the changes to Capital Gains Tax that came in on the 6th April 2020!

copyright: olegdudko / 123rf

If you had sold your main residence before this date, and Captial Gains Tax (CGT) due on that sale would be declared on your self-assessment tax return. It needed to be filed by 31st January in the tax year following the disposal.

If you were an overseas resident selling a UK property, then after 6th April 2015, you had a maximum of 30-days from the date of completion to file a return and pay any CGT due.

"This requirement has now been extended
to all UK residents!"

So now, when anyone sells the main residence (both UK and non-UK residents), if there is Capital Gains Tax due then it must be paid within 30-days from the date of completion. If that gain is covered by any reliefs or exemptions, then the normal reporting time is allowed.

As long as the taxpayer has classed the property being disposed of as their main residence in the last 18 months (the 'deemed occupation' period), then Principal Private Residence (PPR) Relief applies. This means there should be no CGT due in this period.

This final months allowance was there to recognise that not all moves are seamless from one residence to the next; however, HMRC has seen some taxpayers take advantage of this, to obtain PPR on both the new residence and the old residence at the same time.

So to tackle this avoidance measure (and to generate some extra income), Principal Private Residence Relief is now only available for nine months before the disposal of the property.

"There are other important changes too!"

Lettings Relief has always been a valuable opportunity, especially for those individuals classed as 'accidental' landlords. When a property has been let out that had been the taxpayer's main residence, there was up to a £40,000 exemption on Capital Gains Tax.

From the 6th April 2020, Lettings Relief is now only available when the landlord shares occupancy with the tenant. For many landlords, this has now essentially wiped out the relief.

Spouse and civil partner transfers have also been affected, in certain situations, reducing PPR relief from the 100% it used to be to something much less as the total history of the property also transfers to the donee spouse now.

"This rule has been extended to all properties now, not just the main residence!"

As always, when selling property or changing ownership between spouses, I strongly recommend taking professional tax advice as a larger Capital Gains Tax bill could now be due without you realising it.

Until next time ...



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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.