Changes in Capital Gains Tax on Private Residences/Property

Jane Cooper 25 February, 2020

There are significant changes coming into affect from 6th April 2020, which will dramatically affect the tax paid or due to be paid and the relief’s available on residential properties;

Proposed changes in relation to the main residency exemption

With effect from 6 April 2020 the following changes will apply;

1. The final period exemption for PPR relief is to be reduced from 18 months to 9 months (note: special rules giving those with a disability, and those in care, a final period exemption of 36 months will still apply).

2. Lettings relief is no longer available unless the owner was in shared occupation with the tenant.

Proposed changes in relation to the filing of property disposal tax returns and payment of tax

The existing charge to tax on gains realised by non-UK residents on UK residential property will be extended to ALL UK properties. The following properties will now be brought into charge:-

· Gains on commercial property; and

· Gains on residential property owned by diversely held companies. (Previously, non-resident CGT did not apply to residential properties owned by companies that were diversely held, i.e. that would not have been close if UK resident).

· Where a disposal has occurred, a return must continue to be made within 30 days of the date of disposal (using the completion date rather than exchange of contracts as the trigger date even though exchange of contracts is the date of sale for CGT) along with the normal reporting on your tax return.

· Where a tax liability arising a tax return is required to report the disposal within 30 days and the due date for payment on account is now required to be paid within 30 days. The CGT is calculated taking into account your annual exemption for the year and estimate at the correct rate of CGT to apply (18% or 28% based on 2019/20 rates).

· If there is no gain to report or the gain is covered by exemptions or losses, you will not have to complete a property disposal return.

Changes for Companies

· Non-UK resident companies that carry on a UK property rental business or have other UK property income will be liable to corporation tax instead of income tax.

Should you wish to discuss these changes in further detail you can call an office local to you or send an online enquiry via our website and we shall call you to discuss.