The Times Are Changing! – REMINDER Capital Gains Tax (CGT) Rules Are Changing from 6 April 2020
Following our previous articles and notifications we thought it would be wise to remind clients who have / or are thinking of having a rental portfolio that there are major changes arriving from 6 April 2020, when a property is sold.
The table(s) below show the key differences regarding property sales before and after the 6 April 2020.
Reporting and Payment of CGT to HMRC
These changes we feel are going to catch many people out, as they may be unaware the rules regarding the disposal(s) property have changed. HMRC can and more than likely will issue fines and penalties for non-compliance.
Following our previous articles and notifications we thought it would be wise to remind clients who have / or are thinking of having a rental portfolio that there are major changes arriving from 6 April 2020, when a property is sold.
The table(s) below show the key differences regarding property sales before and after the 6 April 2020.
Reporting and Payment of CGT to HMRC
These changes we feel are going to catch many people out, as they may be unaware the rules regarding the disposal(s) property have changed. HMRC can and more than likely will issue fines and penalties for non-compliance.
| Current Rules | Future Rules (6 April 2020 Onwards) |
| CGT disposals are currently declared on the annual Self-Assessment Tax Return and any tax payable is due on 31 January following the end of the tax year. For example, 19/20 CGT liability is due 31 January 2021 | Within 30 days of completion of sale, it will be a requirement to submit an online return to HMRC with an estimate of CGT due. Any amount due will also be payable within 30 days. The CGT disposal will still then need to be declared on the relevant tax return and additional CGT / overpayment of CGT will be dealt with at this time |
Principle Private Residence Relief (PPR)
This has always been a key relief for people who have had a main residence and then moved out and kept the property to be let out as an investment and / or other reasons.
| Current Rules | Future Rules (6 April 2020 Onwards) |
| Individuals are entitled to claim the last 18 months of ownership as qualifying for PPR even though they might not have been living in the property at this point time. This last 18 months is then exempt from CGT | 6 April 2020 will see only the last 9 months of ownership being exempt from tax and thus halving the amount of relief available. The relief has reduced dramatically over the past few years from 36 months to 9 Months |
Letting Relief: Potential Loss of £40,000
Another important planning and vital relief which has been used by us (Letting Relief) is being adapted and in many cases, we believe most landlords will no longer qualify for this relief.
| Current Rules | Future Rules (6 April 2020 Onwards) |
| At present if you sell a property which was once your main residence and subsequently let it, it is possible to deduct a maximum of £40,000 from the amount of the chargeable gain | Going forwards the relief is being withdrawn unless you occupy your main residence with a “lodger” |
Please note that the above tables are aimed to provide a brief summary and full advice should be obtained. Please contact a member of the Stopfords Team on 01623 420 269.
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