Reduced time to pay Capital Gains Tax

There is an important change for UK residents taking effect for disposals made on or after 6 April 2020.

There is an important change for UK residents taking effect for disposals made on or after 6 April 2020.

Tax on sale

Capital gains tax (CGT) is be payable on the eventual sale of property which does not benefit from Private Residence Relief. The tax will be charged on the disposal proceeds less the original cost of the property, certain legal costs and any capital improvements made to the property. This gain may be further reduced by any annual exemption available and is then taxed at either 18% or 28% or a combination of the two rates.

CGT is generally charged at 10%, within the basic rate and 20% for higher rates. However 18% and 28% rates apply to chargeable gains arising on the disposal of residential property that does not qualify for private residence relief.

Payment on account and 30 day returns

Currently, CGT is payable by UK residents by 31 January following the tax year of disposal.

From April 2020 this will reduce to 30 days from the date of completion for residential property. In practice the change will apply to any property not benefitting from private residence relief, such as holiday homes and rental properties.

Minimise your liability

As with many taxes, careful planning and an understanding of the reliefs available can potentially help to minimise your tax bill.