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Be aware of CGT when disposing of land and property.

Return and Payment of Capital Gains Tax within 30 days following the completion day for UK land (including buildings) when there is a charge to capital gains tax.

The provisions are contained in Schedule 2 of Finance Act 2019 which received Royal Assent on 12 February 2019; some of the main points in Schedule 2 are as follows:

  1. These changes to capital gains tax apply to the following (subject to some limited exclusions). Schedule 2 Part 1 1(1) states the schedule applies to:
  1. ‘Any direct or indirect disposal of UK land which meets the non-residence condition (whether or not a gain accrues) and which is made on or after 6 April 2019, and
  2. Any other direct disposal of UK land on which a residential property gain accrues and which is made on or after 6 April 2020.

but this Schedule does not apply to excluded disposals.

(2) A disposal is an excluded disposal if—

(a) it is a disposal on which, as a result of any of the no gain/no loss provisions, neither a gain nor a loss accrues,

(b) it is the grant of a lease for no premium to a person not connected with the grantor under a bargain made at arm’s length,

(c) it is a disposal made by a charity, or

(d) it is a disposal of any pension scheme investments.’

  1. If a disposal is made to which this schedule applies then the person must complete a return in respect of that disposal and submit it to HMRC within 30 days following the completion date. There are exemptions available if the person is not liable to pay an amount on account for this disposal or if the person has already delivered their ordinary self-assessment tax return and included the disposal on that return.
  2. Capital gains tax losses can be used to reduce the capital gains tax payable if the loss occurred before the completion date for the property concerned.
  3. Capital gains tax is payable for this disposal by the filing date for the return (which is within 30 days of the date of completion of the sale of the property).
  4. Schedule 2 of the Finance Act 2019 also deals with the following matters:
  1. making amendments to a return;
  2. HMRC making enquiries into these returns;
  3. amendments of returns during enquiry;
  4. HMRC determinations in relation to these returns;
  5. discovery assessments;
  6. penalties for late filing and payment together with interest on late payments.

Letting relief

In the Budget on 29 October 2018 the Chancellor announced the following change to ‘letting relief’ which affects buy to let properties which are subject to capital gains tax:

  • ‘To better target private residence relief at owner occupiers, from April 2020 the government will reform lettings relief so that it only applies in circumstances where the owner of the property is in shared occupancy with the tenant. The final period exemption will also be reduced from 18 months to nine months. The government will consult on these changes. There will be no changes to the 36 months final period exemption to disabled people or those in a care home.’

The government is still consulting on this matter and has not yet issued draft legislation.

Article from ACCA In Practice