Property owners need to be mindful of recent tax changes as the housing market begins to come out of lockdown.
Jessica Swift, is a Tax Client Manager here at Dyke Yaxley, and she has seen an increase in property-related enquries since the pandemic restrictions began to change.
“The housing market in England has been given the green light to reopen after nearly two months of lockdown, which is good news for buyers, sellers, estate agents and solicitors.
“And some parts of the media have gone so far as to suggest that there could even be an exodus to the countryside as people who have been stuck at home during lockdown think about starting a new life in the country, which could further boost our county’s housing market.”
But Jessica said there had also been tax changes introduced during the lockdown that landlords and second homeowners needed to know about.
“From 6 April, the deadlines for filing and paying any Capital Gains Tax on UK residential property are now just 30 calendar days from the date of completion – and the changes apply to both UK residents and non-UK residents. Previously the tax would only become payable between 10 and 22 months following the date of disposal.
“But if the residential property has been used solely as the owner’s private residence during the time it was owned, then the changes don’t apply to UK residents. You would only need to report a disposal where you make a gain which is liable to Capital Gains Tax.
“Non-UK residents must continue to report sales or disposals of interests in UK property or land – regardless of whether there is a CGT liability – within 30 days of completion. This includes disposals of residential properties, non-residential properties and indirect disposals. It’s important to bear in mind that there is no longer an option to defer the CGT payment.”
Jessica said HM Revenue and Customs had taken the challenging pandemic conditions into account, and was allowing a short period of time for the new rules to bed in.
“Late filing penalties will not kick in until 31 July 2020, so for UK residents, this means transactions completed between 6 April and 30 June, and reported up to 31 July. Any transactions completed from 1 July onwards will receive a late filing penalty if they are not reported within 30 calendar days.
“If you’re unsure whether you have a reporting obligation or how much you need to pay, seek expert advice to assess your situation and calculate what tax (if any) is actually due.”
Jessica Swift, Tax Client Manager at Dyke Yaxley
