Capital Gains Tax: Changes due 6 April 2020

New rules for Capital Gains Tax on property sales comes into force from 6 April 2020. These will affect those with second homes and buy to let properties. To help you get up to speed, here’s an overview of what’s happening. 

New timings to pay tax due

The biggest change will be the timeline you will be required to pay tax due. The current deadline falls in line with self-assessment timings. But, from 6 April you will have to pay Capital Gains tax due within 30 days of a sale. It’s a significant change to be aware of.

Keeping your records up to date will be crucial with these new rules as it’s a very narrow window to prepare and calculate your Capital Gains Tax.

Tax relief

From 6 April 2020, Lettings Relief will only apply to the period owners occupy the property. 

Private Residence Relief will be reduced to include the last 9 months you owned your home, whether or not you resided there during that period. This period has been reduced from a 36 month exemption, although the 36 month exemption will remain in place for disabled persons or those in care homes.

Currently, HMRC advises that all the following need to apply to be exempt from paying capital gains tax when you sell your home:

• you have one home and you’ve lived in it as your main home for all the time you’ve owned it
• you have not let part of it out – this does not include having a single lodger
• you have not used part of it for business only
• the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
• you did not buy it just to make a gain

Keep an eye on the HMRC Capital Gains page for updates after 6 April 2020.

Navigating Capital Gains Tax

Having an additional property is perhaps quite a common scenario these days. Perhaps you’ve moved in with a partner and kept your property by renting it out. If you then run a business and are self-employed, it begins to become a complicated financial path to navigate.

If you need advice on Capital Gains Tax and your annual accounts, get in touch with one of our chartered accountants in Oxted who can guide and help you with your accounting needs.