New CGT Tax Change for Buy-to-Let Landlords
Changes to the capital gains tax payment rules could mean they people selling buy-to-let properties could face financial penalties – that they may not be aware of.
CGT Tax Changes
From 6th April 2020, individuals that sell a residential property that have a capital gain where CGT is payable, will be required to make a digital return to HMRC and to pay and estimate of the CGT within 30 days from the sale completing.
This means that people can no longer keep money in their hands for up to 22 months after selling the property.
What Are the Disadvantages?
April is not far away, and the worry is that this quick turnaround will put risk to people that are unaware of the changes, and fail to comply. As CGT computations are not always straightforward, it could leave people unprepared as they are unable to collate the information necessary to make the CGT calculation in time.
For example, if an owner has made numerous improvements of changes to the property over a number of years, it may be challenging for them to find all of the supporting documents for these changes.
People need to be aware of the vastly reduced time limits, and be ready to make a return when needed, and also be able to estimate the CGT amount due.
Who Will This Affect?
Although the changes do not apply on the sales of a person’s main residence, the CGT changes may affect the following:
- holiday home owners
- buy-to-let properties
- main residences which have been let out at some point
- owners of homes with grounds in excess of half a hectare
- owners of houses which have been partly used for business purposes
What Are the Penalties?
If the rules are not followed, interest on the unpaid tax and other financial penalties will be due.
If you’re worried about the CGT Tax change, contact our solicitors who will be able to help.