Capital Gains Tax (CGT) is a tax payable on the profit made when you dispose of an asset that has increased in value since initial purchase.
If you have ever sold a second property or are considering doing so in the near future, you may be aware that tax is payable, but new rules coming into force from April 2020 are set to change the way taxpayers report capital gains.
The new 30-day rule
At present, any CGT due on the disposal of an asset must be reported by 31st January following the end of the tax year in which the sale was completed.
So, for example, if you sold a second residential property in August 2019 and made a profit, the CGT which you are liable to pay will be due at the end of January 2021, the deadline by which you must submit your Self-Assessment tax return.
However, from 6th April 2020, UK resident taxpayers must pay any CGT due within 30 days following completion of the disposal of a residential property. So, if you sell a residential property in August 2020 and make a profit, the CGT due must be reported and paid within 30 days of completion of the sale.
Not everybody is liable to pay CGT, but if you are, the rate of tax payable is dependent on the type of asset sold and the total amount of your taxable income
Furthermore, if the gain on disposal is not chargeable to CGT, for example if the gains are covered by private residence relief, the new rule is not applicable.
Our tax team help a multitude of clients navigate the complexities governing CGT, and work to establish an effective strategy that minimises your tax liability. If you would like to seek more advice regarding CGT or any other personal tax issues, please get in touch with one of our experts today.