Changes to Capital Gains Tax on UK Residential Property

3rd June 2020

Changes to Capital Gains Tax on UK Residential Property

From 6th April 2020 new rules have been introduced in relation to gains, made by UK resident individuals and trusts, on the disposal of UK residential property. These new rules were already in place for disposals by non-residents.

The new rules apply to:

  • A property that you have not used as your main home for the whole duration of ownership
  • A holiday home
  • A property which you have let out
  • A property that you have inherited and have not used as your main home

You do not have to apply the new rules when:

  • Contracts for sale had been exchanged prior to 6th April 2020
  • You meet the criteria for full Private Residence Relief
  • The disposal is made to a spouse or civil partner
  • The gains on all residential property sales in the year are covered by the Capital Gains Annual Exemption (currently £12,300 for 2020/2021)
  • The property is sold at a loss
  • The property is outside the UK

A disposal includes gifts of property as well as sale.

Gains that are caught under the new rules will need to be declared to HMRC within 30 days of completion of the disposal, with the tax being payable at the same time. The declaration is on account and provisional, and a full declaration will need to be made, as before, on a self-assessment tax return for the year.

HMRC have set up an online service for the declaration and payment.

Penalties may be charged for late declarations and payments.

If you require further assistance and advice, please contact our Taxation Team.

About the Author

Geoff Burningham

Tax Associate

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