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Buying or selling your home? Here's the latest tax rules

The housing market was on hold earlier this year due to COVID-19 but recent announcements have brought about a renewed interest in buying or selling property. With all of the excitement, you should be aware of the tax requirements and reliefs, introduced from 6 April 2020.

UK tax reporting and payment

Last updated: 30 July 2020

UK tax reporting and payment

From 6 April 2020, a new requirement came into force for UK resident taxpayers to report and pay Capital Gains Tax (CGT) to HMRC on disposals of UK residential property within 30 days of completion. As with so many things, COVID-19 has affected what this means in practice, in this case with a revised reporting deadline.

If you were able to complete the transaction during the COVID-19 lockdown, HMRC have a revised deadline of 31 July 2020 for transactions during the period 6 April 2020 and 1 July 2020. As part of the reporting, you’ll need to set up government gateway credentials and an online CGT account. This is a standalone account, which is separate from a self-assessment account. Once the CGT account is set up, you can provide the details and authorise your tax preparer agent. You will also need to include the CGT details on your self-assessment tax return if required to file.

If you have not yet paid the CGT, interest could start to accrue from 31 July so get in touch with your tax advisor at the earliest opportunity to reduce any possible interest charges.

If you completed a property sale any time after 1 July 2020, it’s outside of the revised deadline criteria, so you’ll need to do the above within 30 days of completion or risk interest charges.

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Annabel Poon

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Last updated: 30 July 2020

UK tax reporting and payment

If you have not yet paid the CGT, interest could start to accrue from 31 July so get in touch with your tax advisor at the earliest opportunity to reduce any possible interest charges.

If you completed a property sale any time after 1 July 2020, it’s outside of the revised deadline criteria, so you’ll need to do the above within 30 days of completion or risk interest charges.

Relief available

As a UK resident, you’re only required to report gains on UK residential property where tax is due (opposed to non-UK residents have been required to report a disposal on a UK residential property since 6 April 2015, even if there is no UK tax due). In most cases, you’ll be able to exempt the capital gain using Principal Private Resident Relief (PPR relief).

PPR relief provides an exemption for the period of ownership and occupation. In addition, the final period of ownership can be relieved as long as you have occupied the property as your main residence at some point in the period of ownership. From 6 April 2020, this final period of ownership has been reduced from 18 months to 9 months.

In addition to PPR relief, you could claim lettings relief if you rented out the property. From 6 April 2020, this relief now only applies where you (the owner) occupied the property as your main home alongside the tenant.

Foreign tax credit

UK tax paid can be taken as a credit on the US tax return. If you’re on the ‘paid’ basis of taxation, this new system is a helpful step to ensure that UK tax is credited in the same tax year as the disposal. For further information on US tax implications of Americans owning a UK property, please click here.

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