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UK CGT changes on the disposal of land and property

Monday, 24th February 2020

UK CGT changes on the disposal of land and property  Image
From 6 April 2020 there are some significant changes to the capital gains tax rules on the disposal of UK land and property.  Although this does not impact Gibraltar land and property, a number of our clients who hold UK property will need to be aware of the new rules.
 
UK Land and Residential Property
 
From 6 April 2020 the following changes are being introduced in relation to Capital Gains Tax (CGT) on the disposal of UK land and residential property:
 
• Reporting Deadline – 30 days from the date of completion
 
• Payment of Capital Gains Tax – 30 days from the date of completion
 
The changes will apply to individuals and trustees regardless of whether they are resident in the UK for tax purposes or not. 
 
Damain Woodcock of TFO Tax, which is based in Gibraltar and Manchester advised us as follows:
 
“Currently a disposal of UK land and residential property is declared to HM Revenue & Customs (HMRC) on an individual’s or trustee’s Self Assessment tax return with any CGT being due for payment by 31 January following the end of the tax year (i.e. a disposal of UK land and residential property occurring on 5 April 2020 will be reported on the Self Assessment tax return for the tax year ending 5 April 2020 which should be submitted by 31 January 2021 with payment of the CGT).   Compare this to a disposal of UK land and residential property occurring on 6 April 2020 where a UK Land Return would be due for submission by 5 May 2020 together with payment of the CGT.  A disposal occurring on 6 April 2020 will result in the CGT being payable 9 months earlier than a capital disposal occurring on 5 April 2020.
 
Although the disposal of UK land and residential property from 6 April 2020 will need to be declared to HMRC using a UK Land Return this does not displace the need to declare any such disposals on an individual’s or trustee’s annual Self Assessment Tax Return.
 
A UK Land Return may not need to be submitted to HMRC where no CGT is payable.  However, this is only applicable to individuals and trustees who are resident in the UK for tax purposes, those not resident in the UK will still be required to submit a UK Land Return regardless of whether any CGT is payable.”
 
Other Changes
 
There are other changes which apply from 6 April 2020:
 
• Letting Relief – currently letting relief is available where an individual disposes of a property that at some time during its period of ownership has been their Principal Private Residence (PPR).  Until 5 April 2020 letting relief can exempt capital gains up to a maximum of £40,000.  From 6 April 2020 letting relief will only be available where the owner of the PPR occupies the property at the same time as the tenant.
 
• PPR Relief – where an individual disposes of their PPR the last 18 months of ownership is treated as a period of occupation for purposes of PPR Relief.  From 6 April 2020 this period will be reduced to the last 9 months of ownership.
 
The above is only a brief summary of the changes to be imposed from 6 April 2020 so if you should have any queries please do not hesitate to contact Damian Woodcock at TFO Tax or visit the TFO Tax website.
 

Contributed by Mike Nicholls