Capital Gains Tax is a tax on any profit you made on the disposal of an asset and it applies to most assets when they’re sold. Capital Gains Tax also applies to assets received as gifts from other people (though not usually your spouse or civil partner). A valuation needs to be made of how much the asset is valued at when gifted, and if a capital gain arises when you dispose of the asset, tax is applied. There is tax relief available for gifts, so please speak with an accountant for more advice.

From 6 April 2020, a UK resident individual or trust disposing of UK residential property will be required to file a “residential property return” within 30 days of the completion date of the aforementioned disposal. Penalties will apply if the return is filed late.

The vendor will be required to pay an estimate of the capital gains tax within 30 days of the completion date. This will be treated as a “payment on account” against their total income tax and CGT liability for that year when the annual self-assessment tax return is submitted.

The individual or trust will, therefore, be required to estimate how much tax is payable. This will depend on several factors which could result in a refund/additional liability being due when the annual self-assessment return is submitted. If additional tax is due when the annual return is filed, then interest will be payable at the standard rates set by HMRC.

Non-UK residents have already been required to file returns within 30 days when they have disposed of UK property, both residential and non-residential, since 6 April 2015 and 6 April 2019 respectively. There are no changes for disposals by non-UK resident individuals or trusts from 6 April 2020.

We recommend contacting our tax advisor much sooner (ideally before completing the transaction) when making residential property disposals in order to submit the returns on time and to determine an appropriate estimate of the CGT liability.