CGT on Second Homes - HMRC New Rules Are your Ready?

Discussion in 'Accounts & Finance' started by UK Contractor Accountant, Feb 13, 2020.

  1. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    Capital Gains Tax Payment for Property Disposals From April 2020 HMRC is changing the rules related to the submissions of information and payment of Capital Gains Tax (CGT) due on the disposals of a UK residential property (other than a principle private residence). The tax due must be reported and paid to HMRC within 30 days of completion of the disposal.

    To enable customers to report and pay any CGT liability arising from gains on the sale of a property HMRC are developing a new digital service accessible from GOV.UK, which will be available from April 2020 to make it easier for customers to report and pay their CGT property disposal liability.For many customers this will mean that if they have no other Self Assessment criteria, they will no longer need to register for Self Assessment to notify and pay for a ‘one-off’ property disposal to report the gain.If your client is already within Self Assessment to report other liabilities you will need to ensure that the gain is also included on their Self Assessment tax return, HMRC will be amending the Self Assessment return to allow you to do this.Late filing and late payment penalties will apply, and consequent interest will also continue to be charged

    Unless Solicitors report the disposals to HMRC at the time of conveyancing I can see quite a few taxpayers being caught out by this rule change still believing that they only need to report it on the SA Tax Return and pay the tax in January.
     
    Posted: Feb 13, 2020 By: UK Contractor Accountant Member since: Sep 18, 2013
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  2. UKSBD

    UKSBD Not a real duck Staff Member

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    The £40k letting relief is going too.
     
    Posted: Feb 13, 2020 By: UKSBD Member since: Dec 30, 2005
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  3. KAC

    KAC UKBF Ace Free Member

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    I'm so glad I'm retired now :eek:
     
    Posted: Feb 13, 2020 By: KAC Member since: May 7, 2017
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  4. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    No going back
    Once you’ve submitted your provisional calculation and paid the tax you won’t be allowed to reduce it, say because you made a capital loss later in the year, until you submit your self-assessment return or year-end review. There will also be penalties (details aren’t yet known) for errors and for failing to meet the 30-day deadline for reporting a gain and paying the tax.
     
    Posted: Feb 13, 2020 By: UK Contractor Accountant Member since: Sep 18, 2013
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  5. SteLacca

    SteLacca UKBF Ace Free Member

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    Not exactly, but it is changing such that it will only be available to landlords in shared occupancy with their tenants who qualify for PRR, rather than to all landlords qualifying for PRR.
     
    Posted: Feb 13, 2020 By: SteLacca Member since: Jun 16, 2016
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  6. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

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    HMRC say provisional CGT tax calculation within 30 days of disposal

    What tax rate are you supposed to use - 10%/20%/28%?

    If you disposed of a rental property say middle of April 20 would you know what your income level is going to be for the 2020/21 tax year to enable the CGT to be calculated accurately?
     
    Posted: Feb 13, 2020 By: UK Contractor Accountant Member since: Sep 18, 2013
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  7. SteLacca

    SteLacca UKBF Ace Free Member

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    Surely it'll be either 18% or 28%, and I dare say those whose marginal rate cannot be determined accurately will err on whichever side suits them best (i.e. potentially have a further liability, or potentially have a refund).
     
    Posted: Feb 13, 2020 By: SteLacca Member since: Jun 16, 2016
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