Window for expat UK property owners to pay Capital Gains Tax slashed

HMRC is changing the way that Capital Gains Tax is paid on the sale of UK property.

The new rules apply to expats/non-resident individuals as well as those who are UK resident and take effect from 6th April 2020.

Current rules for expats/non-resident individuals

At present, expats/non-resident individuals are required to complete a Non-Resident Capital Gains Tax Return within 30 days of the sale of any UK residential property.

They are also required to calculate the CGT liability arising and make a payment on account of the full amount of the calculated liability, within that 30 day period.

However, those who are already subject to self-assessment have the option to report any capital gains on their tax return, with any CGT due being payable by 31 January following the year in which the disposal was made.  

So, for example, if a property had been sold on 1 May 2018, the gain would be reportable on a 2018/19 tax return with the tax being payable by 31 January 2020.  This gives someone a period of 10-22 months from the time that the sale is made before the tax needs to be paid.

[Read more about current rules for expats selling UK property here]

New rules

From 6 April 2020, this option will be removed. As a result, in all cases, CGT incurred following the disposal of a residential property will have to be paid within 30 days of the completion date.  

Failure to pay on time will result in HMRC imposing interest and potential penalties. 

This new deadline applies even where no money has changed hands – e.g. when a property is transferred into trust or gifted to a family member.

30 days is a very short period of time

This new rule gives sellers a very limited window in which to make sure that funds are in place to cover the CGT liability as well as collate all of the relevant information to prepare a capital gains tax calculation.

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