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UK Capital Gain Guidance for Residential Property Selling

July 13, 2020 - by mindadmin

Amid the pandemic and outspread of Coronavirus, the UK government is allowing flexibility when it comes to filing tax and annual returns. In lieu of the current situation, issuers will not be laid with a filing penalty for any transactions completed on or after 6th April 2020 and reported up to 31st July 2020. 

Transactions completed after 31st July 2020, however, will be levied with a late filing penalty and interest will be charged if the tax still remains unpaid even after 30 days for all transactions from 6th April 2020. But before you start, here’s a quick guide of everything you need to know about selling property in the UK and the Capital Gains. 

 

First Things First, What is Capital Gains Tax?

Capital Gains Tax is levied on the gain/profit when you sell an asset that is increased in value. It is the profit on the sale that is taxed, not the entire amount of money you receive. And, some assets are tax-free. Moreover, you are not required to pay any Capital Gains Tax if all your gains in a financial year are under your tax-free allowance. Now that you understand what Capital Gains Tax is, let’s see if you are eligible to pay it.

 

Are You Eligible to Report Capital Gains Tax?

 

  • UK Residents

If you are a UK resident who is an individual or trust, you need to report UK residential property disposals made from 6th April 2020 if you have Capital Gains Tax to pay. You must report as well as pay Capital gains Tax online within 30 days of disposal of the property. If you have disposed of more than one property with the same completion or sale date, you are liable to pay Capital Gain Tax on all those properties. 

 

  • Non-UK Residents

If you are a non-resident, you need to submit a non-resident Capital Gains Tax return if you have disposed of or sold a UK property or land up until 5th April 2020. From 6th April 2020 onwards you need to report any and all such disposals and pay your non-resident Capital Gains Tax using the Capital Gains Tax on UK property service if you have disposed of any of the below:-

  • Residental UK property or land
  • Non-residential UK property or land
  • Mixed-use of UK property or land
  • Rights to the asset that derive at least 75% of the value from UK land

 

Sending a Return

Now that you know the nuances that go behind filing a Capital Gains Tax return, you can start a new return by logging into the Capital Gains Tax on UK property service. Here’s what you’ll need to send a return:-

  • Address and postcode
  • Date of when the property was acquired
  • Date of when the property was exchanged or sold or disposed of
  • Date it stopped being your property
  • Value of property when you got it
  • Value of property when you disposed it off
  • Cost of buying, selling, etc.
  • Details of any tax reliefs, allowances, or exemptions
  • Property type, if you are a non-resident

 

Now all that’s left to do is reach out to a professional accountant who can handle these returns so you can leave behind all the hassles of filing Capital Gains Tax.