New capital gains tax rules could catch out those selling buy-to-lets, second homes and furnished holiday lets
By: Shaun Davison Date: 27 August 2019
Category: Press Release,Tax
A leading Norfolk tax expert is warning of new rules coming in next April, which could catch out buy-to-let landlords, second-home owners and people with furnished holiday lets.
A change to tax rules means that people selling such properties will have to report the sale to HMRC within 30 days and pay any Capital Gains Tax in full by that date as well – meaning that the tax bill could come as much as 21 months earlier than it does under the current system.
Shaun Davison, tax specialist at chartered accountants Lovewell Blake, is warning that late filing penalties and interest will apply for those who fail to make a return and pay the tax within the 30 day window.
“Currently anyone selling a residential property which results in a capital tax gain can report the sale on their annual tax return, and don’t have to pay the tax due until the January after the end of the relevant tax year,” said Mr Davison.
“The new rules, which come in next April, mean that the gain will have to be reported within 30 days of completion, and any tax due paid in full in the same period.
“Anyone selling a residential property which is not their principal residence would do well to take professional advice to avoid falling foul of this new regulation.”
The only exception to the new reporting rules are where a transaction is excluded from Capital Gains Tax liability, for example the sale of a main residence, or where the gain is covered by an individual’s annual exemption.
The change will mainly affect those disposing of buy-to-let properties, furnished holiday lets and second homes. Capital Gains Tax rates for individuals are currently 18 per cent for basic rate taxpayers, and 28 per cent for higher rate taxpayers.