Changes in Capital Gains Tax Rules on Sale of Property Cheylesmore Accountants
Changes in Capital Gains Tax Rules on Sale of Property ✧ ✧ The Thegovernment’s government’sdecision decisionto toimplement implementaatemporary temporary stamp stampduty dutyholiday holidayon onhouses housespurchased purchasedunder under£500,000 £500,000 has hascreated createdan anartificial artificialboom boomin inthe theUK UKproperty propertysector sector with withmany manyattempting attemptingto to land landaaproperty propertyfor foraalower lowercost cost than thanwould wouldhave haveotherwise otherwisebeen beenthe thecase. case. Soaring Soaringhouse house prices prices,a ,aresult resultof ofthe theuproar uproar in indemand demandfrom fromexisting existing homeowners homeownersand andbuy-to-let buy-to-letinvestors, investors,have haveunfortunately unfortunately priced pricedout outfirst-time first-timebuyers. buyers.
✧ Amidst all the chaos from coronavirus and the resurgence in activity in the property sector, an adjustment to the rules surrounding submission and payment of CGT on sale of second homes or buy-to-let houses has quietly slipped through the net. Under normal circumstances, individuals would have 22 months to file for CGT but since April, HMRC require any taxable gains on sale of property to be reported and paid in under in 30 days of completing the transaction.
✧ Lack of awareness surrounding sudden changes in taxation policies isn’t an unprecedented issue in the UK given the 2015 situation involving non-residents who sold property and awaited until the filing of their self-assessments to report the sale to HMRC. This resulted in heavy fines which exceeded £1000 in certain cases, albeit some were later overturned on appeal. Late filings spawn an initially penalty of £100 which, a quarter later, begins increasing by £10 a day up to a maximum of £900. After 6 months, an additional fine will be levied of 5% of the tax due or £300, whichever is higher. Regarding payment of CGT, sellers of property incur a fine of 5% of the tax unpaid at 30 days, 6 months and 12 months.
✧ Whilst the government has allowed payment of certain taxes such as VAT to be deferred for a given period of time, the CGT deadline has remained in place with HMRC pointing to the rule changes being displayed on its website. This, in conjunction with the information packs sent to conveyancers and estate agents, means the kind of leniency afforded in the aftermath of 2015 is unlikely to result at present.
✧ Payment of CGT doesn’t apply, however, to individuals who possess only one home which is considered to be their main residence, i.e. at which they have resided throughout ownership, if certain other conditions are met due to the availability of Private Residence Relief.
✧ Concerned about your personal tax situation? Need assistance understanding how the capital gains tax rule applies. Then get in touch with us as soon as possible to determine your potential tax liability to avoid having to face any potential fines and penalties. Our Coventry-based accountants deliver a high quality service to minimise the CGT payable by claiming any allowances applicable and can also communicate with HMRC to extend the deadline on your CGT filing should circumstances permit for the same. Our host of taxation services can also enable you to plough back much of your profits and retain wealth for which you have worked so hard.
Contact Cheylesmore Accountants ✧ Business Email: Info@cheylesmore.com ✧ Contact No.: 02476017778 ✧ Address: 6 The Mount, Coventry CV3 5GU, United Kingdom ✧ Website: https://www.cheylesmore.com
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