TAX HEADLINES ARE YOU DISPOSING OF A RESIDENTIAL PROPERTY? There has been a significant change to the tax reporting and payment requirements for disposals of UK residential properties from 6 April 2020. See below for our quick-fire Q&A on the new rules. Q. WHAT IS THE HEADLINE CHANGE? A. Disposals of any direct and indirect interests in UK residential property or land on or after 6 April 2020, now need to be reported and tax paid within 30 days, rather than under self-assessment. Q. DOES THIS INCLUDE MY OWN HOME? A. Reporting is only required by UK residents where there is a capital gains tax (CGT) liability. Disposals of your own home, where it has been your main residence throughout the ownership period, should be covered by principal private residence relief and will therefore not need to be reported.
26 Summer 2020 - Hazlewoods Magazine
If there have been periods when you have not lived there, let out your home or used part of it as a business, however, reporting may be required. Q. WHEN DO I NEED TO REPORT AND PAY THE TAX? A. If you have disposed of a UK residential property on or after 6 April 2020 (i.e. exchange of contracts) then you will need to report and pay the tax due (as a payment on account) within 30 days of completion of the sale. Q. WHAT INFORMATION WILL I NEED TO REPORT? A. In order to be able to calculate the capital gain due, information such as costs of acquisition, enhancement
expenditure incurred, periods of ownership whilst living in the property etc. will be required. If you are looking to engage a professional adviser to help file the return, giving as much notice as possible will be advisable for them to help you to file on time. Q. WHAT IF I FILE LATE? A. HMRC has announced an initial ‘soft landing’ period with no late filing penalties issued for late returns received on or up to 31 July 2020. Interest will continue to accrue, however, on any late paid tax. After this date, the 30-day deadline will need to be met in order to avoid a late filing penalty.
