Currently, where a CGT liability arises for UK residents on the sale of a residential property, the liability is declared through self-assessment tax returns and payable by 31 January following the tax year in which the gain arises.
From April 2020, where there is a disposal of a residential property by UK resident individuals as well as non-resident individuals and companies, a CGT return will need to be submitted to HMRC within 30 days of the completion of the disposal, and a payment on account of the full calculated CGT liability will be payable within the same 30 day window.
The calculation of the amount payable will take into account an individual’s annual exemption and any unused losses that may be available. A “reasonable estimate” of the individual’s income for the year will need to be made in order to calculate the CGT liability due to the effect of income levels on the CGT rate to be applied.
For disposals by UK residents, the new reporting requirements will not apply where the gain on the disposal, taking into account any other disposals made in the same tax year, is not chargeable to CGT. This may be the case where the gains are relieved in full by principal private residence relief or covered by the annual exemption or unused losses.
These reporting requirements will also not apply where the gain arises from the disposal of a foreign residential property in a country covered by a CGT double taxation agreement or arises to a person taxed on the remittance basis.
