Buy-to-let landlords, who decide to sell their properties should be aware of changes to the capital gains tax (CGT) payment rules. Landlords are advised to have information ready and think about their tax position as soon as a property goes on the market, to avoid the risk of financial penalties.
From the start of the new tax year, 6 April 2020, people selling property, where there is a capital gain, must complete a digital return and pay an estimate of the CGT due within 30 days of completion. Previously, sellers had 22 months to pay the charge.
The change applies to homes which have been let and buy-to-let properties as well as holiday homes and houses used as businesses. It does not affect the sale of main residences. Anyone failing to pay within the deadline could face interest on the unpaid tax and other penalties.
According to Imogen Lea, tax expert with Clarke Willmott LLP: “The risk of such a tight turnaround is people being unaware of the changes and failing to comply. They need to be aware of the vastly reduced time limits and to be ready to make the return and estimate the CGT due.
“CGT computations are not always straightforward which could mean that if people are not prepared, they might not be able to collate the information necessary to make the CGT calculation in time.
“If an owner has made improvements to the property the cost of these will be deductible from the capital gain, but if there have been numerous improvements over many years it may be challenging for the client to find all the supporting documentation.”
For this reason, Ms Lea said property owners should start pulling together paperwork and considering their CGT position sooner rather than later.
Read more about this story on the Property Wire website.