Insights

UK taxpayers who own investment properties should be aware of an important change that is taking place with effect from next year. It relates to the timing of tax payments when a disposal of residential property is made.

From 6 April 2020, the liability to capital gains tax (CGT) on gains made on the disposal of UK property by UK residents, will be payable 30 days after the date of disposal rather than on 31 January following the tax year in which the disposal takes place (as is currently the case).

Whilst this strips out the initial computation of the gain from the self-assessment system, it is deemed to be an interim payment of CGT and the final calculation of the total CGT liability will be completed as part of the usual self-assessment system reporting.

In the event of a planned sale of a property, it is important to seek professional tax advice, in advance, to understand what information is required to calculate the gain arising and to be able to complete the report that is required, within the relevant time limit. Having advance warning of the tax liability will also help to ensure that the appropriate funds are reserved from the proceeds of the sale to pay the CGT due straight away.

To confirm, there is no reporting requirement on a no gain/no loss disposal or where no tax is due.

Where tax is due however, an interim payment must be made within 30 days of the disposal.

For more advice on property tax please email us at partners@rjp.co.uk