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"All change" on the Capital Gains Tax front from 6th April 2020

On 6th April 2020, capital gains tax (CGT) on property will change.  This may have an effect on the amount of tax paid to HMRC following upon the disposal of a property.

These are 3 major changes to the current legislation.

Principal Private Residence Relief

At the moment where a property has been a main residence for the last 18 months of ownership, even where you are not living there, this is treated as the principal private residence period and thus exempted from tax. 

From 6th April 2020, this period will be reduced to 9 months.

CGT liability

At present where a CGT liability arises, this is reported on a tax return and paid by 31st January following the end of the tax year in which the disposal is made. 

From 6th April 2020, a provisional calculation of the gain will need to be made and the tax paid over to HMRC within 30 days of completion of the sale.

Lettings Relief

Currently if a property was at some stage a main residence and also has a period when it was rented out, potential CGT relief of up to £40,000 on any gains has been allowed.  Married couples could claim up to £80,000. 

From 6th April 2020, lettings relief will only apply to the period of ownership where the landlord occupied the property at the same time as the tenant.

If you are a non-UK resident the above changes may apply slightly differently but it must be noted that all non-UK residents must submit a non-resident CGT return within 30 days following disposal of the property.

HMRC have said that they will provide a new online service to make notification easier and that help and guidance will be made available. 

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