House for Sale: Capital Gains Tax

News: Selling a property? Make sure you pay the capital gains tax due, and quickly!…

23rd September, 2021, Chris Goad

On the 6 April 2020, the government made numerous changes to tax payable around property.  The main one being a new requirement to report and pay capital gains tax on disposals of UK residential property 30 days after the completion date.

In this article Chris Goad, partner at Stephenson Smart’s Wisbech office, explains the changes and how they may affect you:

Capital Gains Tax

Any UK resident that disposes of residential property, that gives rise to a capital gains tax liability, must now file a capital gains tax return and pay an estimate of the capital gains tax due within 30 days of completion. If the gain is covered by principal private residence relief no return is due, but this does mean the calculation to confirm this will need to be done within 30 days of the sale of the property. Failure to file a return, if due, could result in a penalty being issued.

Final period exemption

Historically, final period exemption meant that you were not usually liable to capital gains tax for the last 18 months of ownership, provided you lived in the property as your main residence at some point during your period of ownership. This gave protection for someone moving to a new main residence when having difficulty selling their original home. However, the final period has now been cut to nine months. Therefore, if you buy a new property before selling the old, it will be important to sell within nine months to avoid a possible capital gains tax bill.

Letting relief

Letting relief used to give up to £40,000 relief (£80,000 for a couple who jointly own the property) for someone letting part, or all, of a property which is their main residence, or was their former main residence at some point during their period of ownership. But, under the new rules, letting relief will only be available where you jointly share occupation with a tenant. Only the period during which both the owner and tenant occupied the residence will qualify for letting relief. Lettings that occurred prior to 6 April 2020, that would have qualified for letting relief under the old rules, will become taxable under the new rules only.

If we can help you navigate these tax matters, or any others, please get in touch.

Profile: Chris Goad

Related Pages: Capital Gains Tax

23rd September, 2021, Chris Goad

On the 6 April 2020, the government made numerous changes to tax payable around property.  The main one being a new requirement to report and pay capital gains tax on disposals of UK residential property 30 days after the completion date.

In this article Chris Goad, partner at Stephenson Smart’s Wisbech office, explains the changes and how they may affect you:

Capital Gains Tax

Any UK resident that disposes of residential property, that gives rise to a capital gains tax liability, must now file a capital gains tax return and pay an estimate of the capital gains tax due within 30 days of completion. If the gain is covered by principal private residence relief no return is due, but this does mean the calculation to confirm this will need to be done within 30 days of the sale of the property. Failure to file a return, if due, could result in a penalty being issued.

Final period exemption

Historically, final period exemption meant that you were not usually liable to capital gains tax for the last 18 months of ownership, provided you lived in the property as your main residence at some point during your period of ownership. This gave protection for someone moving to a new main residence when having difficulty selling their original home. However, the final period has now been cut to nine months. Therefore, if you buy a new property before selling the old, it will be important to sell within nine months to avoid a possible capital gains tax bill.

Letting relief

Letting relief used to give up to £40,000 relief (£80,000 for a couple who jointly own the property) for someone letting part, or all, of a property which is their main residence, or was their former main residence at some point during their period of ownership. But, under the new rules, letting relief will only be available where you jointly share occupation with a tenant. Only the period during which both the owner and tenant occupied the residence will qualify for letting relief. Lettings that occurred prior to 6 April 2020, that would have qualified for letting relief under the old rules, will become taxable under the new rules only.

If we can help you navigate these tax matters, or any others, please get in touch.

Profile: Chris Goad

Related Pages: Capital Gains Tax


House for Sale: Capital Gains Tax

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