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30-day window to report and pay capital gains tax on property

29 January 2020: changes to reporting and paying tax on residential property sales by UK residents are coming into effect this year. Practitioners and taxpayers should be aware of the new regime for the residential sector.

The new measures – aligning UK residents with non-residents – seek to raise additional tax from the disposal of residential property by collecting this tax much more quickly. For personal taxpayers, capital gains tax (CGT) is paid anywhere between 10 months and 22 months after the date of sale. Bringing this forward to 30 days will give a one-off additional yield of around one and a quarter year’s tax.

The acceleration of the payment of CGT on the sale of residential property takes effect for disposals on or after 6 April 2020 and the enabling legislation is s14 and Sch 2, Finance Act 2019.

Awareness and information gathering will be key to determining whether tax is due. Frequently, the taxpayer is unaware of the limitations of main residence relief and will not anticipate that they might have a CGT liability to report and pay.