Unlike previously You will no longer be able to defer payment of Capital Gains Tax via your Self-Assessment return, and any tax owed must be paid within the 30-day reporting and payment period.
HMRC have launched a new online service to allow you to report and pay any Capital Gains Tax owed.
Guidance on this new system was due to be updated in April 2020 but extended to end of June 2020. However, from 01st August 2020 onwards this system is live and there will be penalties for delayed submissions. We strongly advise us if you plan to sell your property as we will need to prepare your capital gains return within 30 days of completion.
You will need to have a government gateway ID linked to you. We recommend all our clients to have their own Government Gateway ID so they have access to view all their taxes online.
Key changes to how your tax are calculated
Annual tax-free allowance for Capital gain for 2020/21;
- £12,300
- £6,150 for trusts
What you will pay;
- 28% on your gains from residential property
- 20% on your gains from other chargeable assets
If this amount is within the basic Income Tax band you’ll pay 10% on your gains (or 18% on residential property). You will pay 20% (or 28% on residential property) on any amount above the basic tax rate.
Reliefs you can claim
Private Residence Relief (if you lived in the home)
You do not pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all the following apply:
- you have one home and you have lived in it as your main home for all the time you have owned it
- you have not let part of it out – this does not include having a lodger
- you have not used part of it for business only
- the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
- you did not buy it just to make a gain
- You do not need to do anything. You will automatically get a tax relief called Private Residence Relief.
If you lived only part of the period that you owned the property you can still claim this relief based on the % of time you lived in the property
If you let out your home
You may have to pay Capital Gains Tax if you have let out your home. How much you pay depends on how long you lived in it. Having a lodger does not count as letting out your home.
You will pay tax on your ‘chargeable gain’. This is your gain minus any Private Residence Relief you are eligible for.
You get full relief for:
- the years you lived in the home
- the last 9 months you owned the home – even if you were not living there at the time
- If you sold the property between 6 April 2014 and 6 April 2020, you get relief for the last 18 months you owned it.
If you only own one home and you are disabled, in long-term residential care or sold the property before 6 April 2014 you get full relief for the last 36 months you owned it.
If you only let out part of your home
You will need to work out what proportion of your home you lived in. You only get Private Residence Relief on this proportion of your gain.
Claim Letting Relief
If you lived in your home at the same time as your tenants, you may qualify for Letting Relief on gains you make when you sell the property.
You can get the lowest of the following:
- the same amount you got in Private Residence Relief
- £40,000
- the same amount as the chargeable gain you made while letting out part of your home
Letting Relief does not cover any proportion of the chargeable gain you make while your home is empty.
If you have any questions or just completed on the sale of your house. Please give us a ring and we would be happy to assist you.