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From the 6 April 2020, all Capital Gains Tax (CGT) payments from the sale of a residential property must be paid within 30 days of completion. This is a massive change!

Currently, you will report capital gains on a self-assessment tax return. This means that the tax would be payable by the 31 January in the year following the gain – delaying the CGT payment for between 10-20 months after the sale. For example, if you sold a property on the 30 June 2019, the tax would not be payable until the 31 January 2021 – that’s over 18 months from the date of completion.

Following the changes in April, that tax would be due just 30 days later… This will have a huge impact on cash flow, especially where mortgages have to be settled out of the proceeds and you plan on using the total proceeds to fund another project

Main properties are normally exempt from CGT but those dealing with the one-off sale of a secondary property, rather than those experienced with multiple disposals, will get caught out. So please bear this in mind.

If you don’t pay on time, HMRC will impose, at best, interest, and at worst, penalties. It’s also important to note that the 30-day rule will even apply when property is transferred into trust or gifted to a family member – where no money has changed hands.

If you’re unsure about how you could be affected, please get in touch. CGT is complicated at the best of times, and there are more changes to come, including private residence relief and lettings relief which are the main reliefs people claim.

Check out our blog on private residence relief and lettings relief for more information.