Changes to Capital Gains Tax on residential properties

These changes, which come into effect in April 2020 apply to all disposals of residential property where a capital gain arises, including buy-to-let properties and second homes.

Less time to pay Capital Gains Tax

From 6 April 2020, any individual selling a residential property (that is not their main residence) will be required to submit a return and pay any capital gains tax within 30 days of completion of sale.

Ultimately, the individual will still need to record the gain their self-assessment tax return and any over or under payment of tax will be dealt with at that time.  Any overpayment of tax will not be repayable until the self-assessment tax return has been submitted.

Letting Relief

Currently, a CGT relief of up to £40,000 (£80,000 if the property is jointly owned) is available for those who let out a property that is, or has been, their home.  This means that landlords can claim CGT relief even if haven’t lived in the property themselves for a long time.

From April 2020, this effectively is being abolished as the relief will only apply to landlords who are in shared occupancy with their tenant.

Final period exemption

Up to April 2020, the final period exemption means that any gains made in the final 18 months of ownership will be exempt from CGT, even if the landlord does not occupy the property during that period.

From April 2020, the final period exemption is being reduced to only the final 9 months of ownership.