Capital Gains Tax 30-day rule for let property sales
Changes to how Capital Gains Tax on property sales is paid came into effect from 6 April 2020. As a relatively new update, this is a reminder that the sale of buy to let properties or holiday lettings now needs to be reported to HM Revenue and Customs (HMRC) within 30 days.
This means that UK residents that make a profit known as a capital gain from selling UK residential property, which is not their main home, will be required to inform HMRC and pay any tax due within 30 days of completion. This can be done via the HMRC Capital Gains Tax on UK property account.
The period 2019-2020 was the last tax year that you were able to declare Capital Gains as part of a self-assessment. Now you must adhere to the 30-day rule and the declaration will need to be made online as soon as you sell a property.
HMRC Capital Gains Tax guidance provides the detail on what you need to do if you sold property in the UK which you can find here.
Capital Gains Tax on residential properties on separation or divorce
For buy to let or holiday homes, transfer of ownership to an ex-spouse or ex-partner is deemed at market value and there is exposure for Capital Gains Tax. Normally the capital gains tax implications would be considered in divorce and settlements proceedings and so we can help advise on the Capital Gains Tax implications and prepare a report advising on different scenarios such as what if the property was sold entirely or if one party takes ownership of the property vs if the other party takes ownership. It’s this type of information that solicitors don’t tend to advise on too.
There is also the risk of Capital Gains Tax exposure on sale or transfer of ownership for the marital/joint home if one party has vacated the property and the market value has changed between vacating the property and selling/transferring ownership. In this situation, there are Capital Gains Tax implications as the property has ceased to be the main residence for one of the persons and so we can also provide advice on this.
Personal tax returns accountancy services
If you are in need of advice to help navigate your financial situation, speak to our team of accountants at McKenzies for professional tax advice to ensure that you have met all the requirements for the new Capital Gains Tax on property sales.