New CGT rules on disposal of Residential Property Investments

mystic_trev

From April 2019, a payment on account of any CGT due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal. This will not affect gains on properties which are not liable for CGT due to Private Residence Relief. The government will publish draft legislation for consultation in 2016.

https://www.gov.uk/government/publications/main-tax-announcements-for-autumn-statement-2015/main-tax-announcements-for-autumn-statement-2015

chucknorris

mystic_trev wrote: »

https://www.gov.uk/government/publications/main-tax-announcements-for-autumn-statement-2015/main-tax-announcements-for-autumn-statement-2015

Thanks, Trev I thought I heard something about CGT when I was watching it live, but I was only half listening at the time, and then when I looked for it in the detail I couldn't find it.

Generali

mystic_trev wrote: »

https://www.gov.uk/government/publications/main-tax-announcements-for-autumn-statement-2015/main-tax-announcements-for-autumn-statement-2015

Interesting. I wonder why? Is people moving abroad without paying CGT a big problem I wonder or maybe slamming the door before the horse gets going for a change.

antrobus

Generali wrote: »

Interesting. I wonder why? Is people moving abroad without paying CGT a big problem I wonder or maybe slamming the door before the horse gets going for a change.

Possibly.

But non-residents are already required to report disposals of residential property and cough up any CGT within 30 days.

https://www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property

padington

One way of bolstering cash pile before the election.

chucknorris

Generali wrote: »

Interesting. I wonder why? Is people moving abroad without paying CGT a big problem I wonder or maybe slamming the door before the horse gets going for a change.

I think that it is just cash flow, when you submit self assessment returns you pay in Jan/July for the preceding April, so quite some delay. This is offset by a 50% payment in advance based upon the previous year, but as CGT property disposals tend to be a one off event, there wouldn't have been an allowance in the advance payment for a CGT disposal.

Generali

chucknorris wrote: »

I think that it is just cash flow, when you submit self assessment returns you pay in Jan/July for the preceding April, so quite some delay. This is offset by a 50% payment in advance based upon the previous year, but as CGT property disposals tend to be a one off event, there wouldn't have been an allowance in the advance payment for a CGT disposal.

That's a good point and presumably the Treasury is expecting a lot of CGT events to occur as a result of the changes to the BTL rules.

It'd be interesting to see Treasury modelling on those BTL changes. I suspect that they might well have quite a sting.

chucknorris

Generali wrote: »

That's a good point and presumably the Treasury is expecting a lot of CGT events to occur as a result of the changes to the BTL rules.

It'd be interesting to see Treasury modelling on those BTL changes. I suspect that they might well have quite a sting.

Our eventual (total) CGT bill will be about £750k so that's a fair amount of dividend income/interest that we would have received for the time lag period. That's if it hadn't of been for that pesky chancellor (it's fair enough, I can fully understand he sees that as his benefit, not ours). I wonder how much the advance percentage will be, I can't see why it won't be 100%, but I can hope for less.

cells

chucknorris wrote: »

Our eventual (total) CGT bill will be about £750k so that's a fair amount of dividend income/interest that we would have received for the time lag period. That's if it hadn't of been for that pesky chancellor (it's fair enough, I can fully understand he sees that as his benefit, not ours). I wonder how much the advance percentage will be, I can't see why it won't be 100%, but I can hope for less.

he is becoming the penny pinching chancellor but maybe that is what the nation needs.

In your example of £750k if delayed for a year it would be worth about £7,500 more to him in interest collected this month rather than a year from now.

Maybe in the future Solicitors will be required to pay the clients CGT (like they do stamp duty) from sale proceeds rather than leaving it for the owner to do. Maybe they will take 28% of the gain and leave it for the client to reclaim if they are in the lower band. Lots of people simply do not follow or know anything about tax. My guess is lots of people (the 'accidential landlords' with just one BTL that used to be the main home) sell their rentals and pay no CGT as they simply don't know the rules. Having the solicitors do it would get rid of that potential error

chucknorris

cells wrote: »

he is becoming the penny pinching chancellor but maybe that is what the nation needs.

In your example of £750k if delayed for a year it would be worth about £7,500 more to him in interest collected this month rather than a year from now.

Maybe in the future Solicitors will be required to pay the clients CGT (like they do stamp duty) from sale proceeds rather than leaving it for the owner to do. Maybe they will take 28% of the gain and leave it for the client to reclaim if they are in the lower band. Lots of people simply do not follow or know anything about tax. My guess is lots of people (the 'accidential landlords' with just one BTL that used to be the main home) sell their rentals and pay no CGT as they simply don't know the rules. Having the solicitors do it would get rid of that potential error

Yes I could see that working like stamp duty, it would protect fools from blowing money within 30 days etc.

michaels

We sold in Jan and will have to pay 20k before the end of this Jan...but with interest rates so low we haven't really benefitted that much.

Aren't there some figues in another thread suggesting the 3% non-ppr cgt will raise about 800m pa suggesting of order of 25 billion in annual transactions or 125k transactions at 200k a pop - does that sound reasonable?