Monday 6 April 2020 will see a range of tax changes come into effect with the start of the 2020/21 tax year related to the sale of property.
Some of these changes have the potential to have considerable implications for your tax bill, depending upon your specific circumstances.
Here is a selection of the most significant changes to Capital Gains Tax (CGT):
Some of the biggest changes in April relate to CGT, with extensive changes to Private Residence Relief and Lettings Relief set to come into effect.
While current and former landlords will be most affected by the changes, people who choose to stagger the buying and selling process so that they only sell up after buying their new home could be at increased risk of incurring a tax bill that they would not previously have received.
Until now, homeowners have had 18 months in order to complete the sale before CGT applies, however, restrictions to Private Residence Relief will see this slashed to just nine months from April, meaning conveyancing and finance delays could quickly become very costly.
Furthermore, from April, Lettings Relief – which discounts from the CGT calculation by up to £40,000 any time during which a landlord used a property as their main residence – will be restricted to circumstances where the landlord lived at the property with their tenant.
Compounding the potential additional tax bills that arise from the changes is a new requirement for CGT on residential property to be calculated and paid within 30 days of the completion of the sale, rather than being included up to 10 months later on an individual’s Self-Assessment Tax Return. Taxable gains from a sale will need to be reported via a standalone online return, but will still also need to be included in a person’s subsequent Self-Assessment Tax Return for the year.