18th
Nov 2019
BTL Landlords and owners of second properties are being warned by a tax expert that if they are planning to sell a property with a sale completion date after 6th April 2020, then they would be best served to take independent financial advice because of the new CGT implications.
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On 6th April next year the new capital gains tax rules come into effect, one of which makes it mandatory for people selling an additional home to pay their CGT liability in a much quicker time period than required previously.
Richard Mathews chief executive of a tax and legal consultancy wrote on a business website that at present, UK residents' capital gains tax does not have to be paid until January 31st after the end of the tax year that the capital gain was measured.
So for some people it meant that they could keep the capital tax for up to 21 months before 'surrendering' the amount owing to the HMRC.
However this will all change after 6th April 2020 with the new rules, which will mean anyone selling a property that comes under CGT liability, will have to pay the tax no later than 30 days after the sale completion.
Matthews said: “This could create cashflow difficulties in getting the funds to be able to pay the tax in such a short time.” If people are unable to pay up under the new timescale then they should expect to be slapped with extra charges and penalties by the HMRC.
Matthews also advises landlords and owners of additional homes, that they can set legitimate costs against the CGT liability which includes agents' fees, stamp duty, legal costs and property improvements.
Other sums can also be deduced if people experienced losses through letting out the property.
He says: “Clearly, the issue of Capital Gains Tax on second homes is not straightforward.
“Any landlords, second homeowners or property investors thinking of selling within the next 12 months should take specific advice to determine the ‘tax cost’ of selling before or after April 6 2020.”
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