On 6th April 2020 capital gains tax on the sale of property is changing. The three significant changes are described below:
Principle Private Residence
Where a property was once your principal private residence (PPR) the last 18 months of ownership, even if you are not living there, is treated as qualifying for PPR and exempted from capital gains tax. From 6 April 2020 this period is reduced to 9 months.
Currently if you sell a residential property which was at one time your main residence but has then been rented out, it is possible to deduct ‘lettings relief’ up to £40,000 from any capital gain for each qualifying owner of the property.
The only time that this relief will qualify from 6 April 2020 is when the letting of the property occurred while the owner was living in the property at the same time.
Capital Gains tax payable date change
From 6 April 2020 it will be necessary to submit a provisional calculation of the gain to HMRC and pay the tax that is due within 30 days following the completion of the sale of a residential property. The gain will still be recorded on the tax return as usual and any over/under payment of tax will be dealt with. If tax is overpaid, then this will not be repayable until the tax return is submitted.
If you have any questions about this, please contact any member of the tax department on 0161 236 7677.