21 October 2019

CGT on property sales: changes are coming in April 2020

If you are considering selling a property that you have previously rented out that would incur a capital gain, you should be aware of important changes to CGT on property sales coming in April 2020. If you wait until the new financial year to sell, you may find yourself having more tax to pay and less time to pay it.

There are three important changes to CGT and property from 6 April 2020:

  1. Letting relief will be abolished for all residential property sales with effect from 6 April 2020. This valuable relief is currently available when you sell a property that you have owned and occupied at any time and have also rented out at some point during your ownership.
  2. Principle Private Residence Relief (PPR) currently applies on the last 18 months of ownership of a property where a property has been owned and occupied at any time. From 6 April 2020, this period will be reduced to just nine months.
  3. Capital gains tax payable on a property sale after 6 April 2020 will be due 30 days from the date of completion of the sale. This means that not only might you have more tax to pay, but you might have to pay it sooner.

Before you panic and put your house on the market, remember there are other things to take into consideration. You should look at how much of your annual CGT allowances you have used up, as well as your spouse’s allowances, especially if they are a lower-rate taxpayer than you.

Next steps

If you are considering selling a property that you have occupied and rented out, we would strongly advise you to contact us prior to making that decision.

We can advise you of the tax consequences of a pre and post 6 April 2020 sale, helping to save you tax and giving you more information to help you decide on your next course of action.

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