If you own a second home, a holiday rental or other rental properties you’ll know you need to pay Capital Gains Tax (CGT) on the money you make when you sell because they are not your principal home.

Previously you declared the gain made as part of self-assessment and settled the bill as part of your tax payment in the January following submission. But changes due to come into effect next year mean that the money you owe HMRC is now due within 30 days of the sale completing, alongside a new online property disposal return.

This will be a blow to many who have been used to hanging on to the money for, in some cases, well more than a year. But trickier than paying the money to HMRC in time will be figuring out at which CGT rate you need to pay it – 18% or 28% based on 2019/20 rates.

At the end of the year you will still need to file a self-assessment tax return showing your full income, gains and losses. At this point, the CGT you have paid will be deducted off the tax you owe. You may even end up with a repayment.

The changes were announced in 2018 but delayed until 6 April 2020.

What you need to do

After 6 April 2020, if you are selling a property which isn’t your main residence you’ll need to complete the online property disposal return and make the CGT payment within 30 days of completion. We can advise on the relevant rate of CGT that you will need to pay.

If you don’t make a gain, or it is covered by exemptions or losses, you don’t have to complete the property disposal return.

When you prepare your information so we can complete your self-assessment tax return you’ll need to give us details of the sale and the tax you paid so we can ensure it is shown on your submission.

As always, the friendly TLC team are here to help answer your queries so if you’re planning to sell a property which may mean you have to pay capital gains tax, do give us a call to have an informal chat about your options.