Changes to Capital Gains Tax payment window for residential property gains – April 2020
The Schedule, ‘Changes to Capital Gains Tax payment window for residential property gains – April 2020’ which will apply to both residents and non-residents, sets out the circumstances when a return of a residential property disposal is required to be delivered to HMRC and how to calculate the amount payable on account of the person’s liability to CGT for the tax year in which the disposal takes place.
The general rule will be that a return in respect of the disposal must be delivered to HMRC within a ‘payment window’ of 30 days following the completion of the disposal, and a payment on account made at the same time. The self-assessed calculation of the amount payable on account takes into consideration unused losses and the person’s annual exempt amount. The rate of tax for individuals is determined after making a reasonable estimate of the amount of taxable income for the year.
Gains on disposals reported on the new return can be ignored when determining whether to register for self-assessment. Enquiries into the return will be able to be made separately from any self-assessment return that may be due.
For disposals by UK residents, the new reporting and payment requirements will not apply where the gain on the disposal (or the total gain where more than one residential property disposal is made in the year of assessment) is not chargeable to CGT (for example where the gains are covered by private residence relief, unused losses or the annual exempt amount), arise from the disposal of a foreign residential property in a country covered by a CGT double taxation agreement, or arise to a person taxed on the remittance basis.
For non-residents, the reporting requirement is expanded from 6 April 2019 to include all companies. However, an exception from making a payment on account for those that make self-assessment returns will cease for disposals on or after 6 April 2020 in line with the introduction of payment on account for UK residents.
The Schedule also contains provisions relating to disposals by non-residents of UK non-residential property and indirect disposals, which have effect from 6 April 2019. Further information on this is given in the Tax Information and Impact Note ‘Capital Gains Tax and Corporation Tax: Taxing gains made by non-residents on UK immovable property’.
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For more information https://www.gov.uk/government/publications/capital-gains-tax-and-corporation-tax-on-uk-property-gains/capital-gains-tax-payment-window-for-residential-property-gains or contact us