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Selling residential property? Beat the CGT changes

/ 20 January 2020

Chris Smith

We have previously reported on changes being introduced from 6 April 2020 to Capital Gains Tax (“CGT”) on the disposal of residential property by a UK resident (if you are non-resident the position is materially different and is not covered in this note). You can find the detail of the changes, as we previously reported them, here – but in summary:

  • For a disposal of a “main residence”
    • The additional relief of up to £40,000 per owner where the property has been let at some time will (in most cases) cease to be available
    • The “final period” exemption will be cut from 18 months to 9 months
  • For a disposal of any residential property (whether or not a “main residence”) if any tax is payable, details of the disposal will need to be given to HMRC within 30 days of completion and any tax will need to be paid at that time.

The “main residence” changes can in some cases materially increase the CGT bill; and in every case where tax is payable the changes will affect cashflow by accelerating payment of any CGT due. So, other things being equal, you may want to ensure that any disposal is made before rather than on or after 6 April.

This doesn’t mean that you have to complete before that date. Because of the way in which the CGT rules operate, it is sufficient that you enter into an unconditional contract (it must be an unconditional one) to dispose of the property before 6 April, and complete later. At the margins this may give you just enough flexibility to slip under the wire: worth remembering.

If you are a buyer rather than a seller, it is also worth bearing in mind that there may in some cases be deals to be done in exchange for accelerating exchange of contracts into the current tax year.

For more on this, please get in touch with your usual BKL contact or use our enquiry form.

Chris Smith

Director of Personal Tax Compliance

T +44 (0)20 8922 9160
E chris.smith@bkl.co.uk

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