From 6 April 2020, if you live in the UK and sell a residential property in the UK you will need to report the sale to HMRC within 30 days of completion and pay any capital gains tax owed.
Capital gains tax (CGT) is a tax on any profit when you sell or dispose of something which has increased in value. For example, if you purchased a house for £250,000 and then sold it for £300,000 you will have made a gain of £50,000.
Disposing of a property could also include giving it away as a gift, or transferring it to someone else, swapping it or getting compensation for it – such as an insurance payment if it was destroyed by fire.
HMRC is planning to launch an online service to make it easy to report and pay any capital gains tax owed. The rules are very complex, with various thresholds and allowances, and so it is important to check with your professional advisers.
You will need to report to HMRC within 30 days
You may need to make a report and a payment when, for example, you sell or otherwise dispose of:
- a property that you have not used as your main home;
- a holiday home;
- a property which you let out for people to live in; or
- a property that you have inherited and have not used as your main home.
You do not need to report to HMRC:
You will not need to make a report if:
- a legally binding contract for the sale was made before 6 April 2020;
- you meet the criteria for private residence tax relief;
- the sale was made to a spouse or civil partner;
- the gains (including any other chargeable residential property gains in the same tax year) are within your tax-free allowance (called the annual exempt amount);
- you sold the property for a loss; or
- the property is outside the UK.
Different rules apply for non-UK residents and trusts.
If you do not tell HMRC about the sale and any capital gains tax owed within 30 days of completion, you may be sent a penalty as well as having to pay interest on what you owe.
How we can help
Our experienced property law team can help you and guide you through the entire sale process.
For further information on any aspect of selling (or buying) a property, please contact Rod Hughes or David Millward in our property team in Heathfield, East Sussex on 01435 890 101 or email email@example.com.
This article is for general information purposes only and does not constitute legal or professional advice. Please note that the law may have changed since the date this article was published.