Buy-to-let landlords Act Now - Capital Gains Tax Payment Changes Looming
Do you own a buy-to-let or an investment residential property in the UK?
If so, you will no doubt be aware of the payment changes to capital gains tax payments from 6th April 2020 due on disposal. At the same time, Lettings Relief, has been seriously restricted and also affecting buy-to-let landlords.
Read on to learn what you need to do to prepare for these landmark changes.
It is important that you work closely with an accountant to understand the new payment changes of the Capital Gains Tax (CGT), especially if you plan to sell your property before 6th April 2020.
Mirandus Accountants are your local accountant and tax adviser and as a chartered tax advisory practice, we are well placed to help with all aspects of capital gains and tax implications on your unique personal circumstances. Contact us to see how we can help.
Summary of changes to capital gains tax on your buy-to-let or investment property
Lettings relief – If you currently rent out a property, which was at one stage your main home, currently up to £40k of any gain you make on the sale of the property is currently tax free. From 6 April 2020, this very valuable tax relief will no longer apply unless you were also living in the property at the time of renting it out. You could say then, that this tax relief could be renamed to a 'lodger relief'.
Principal Private Residence relief (PPR) - If you plan to sell a buy-to-let or investment property, currently you would qualify for PPR if the property was your main residence in the last 18 months of ownership, which means you would be let off the hook with a capital gains tax bill at the point of sale. After 6 April 2020 this period becomes 9 months.
Both the above changes could have costly implications when your property is sold.If you are thinking of selling your property now, you may wish to consider selling before the start of the next tax year not only because of the above two changes, but also for another major change coming into force, directly impacting buy-to-let landlords or those with residential investment properties.
If you plan on selling your buy-to-let or residential investment property after the next tax year, after 6th April 2020, you need to be aware of another major change to the payment terms of your capital gains tax bill, otherwise you could be liable to HMRC penalties.
30 day Deadline
From 6th April 2020, you will only have 30 days following completion of the sale to submit a provisional calculation of the gain and pay the tax that is due. This means that that with an estimated calculation of your gains in the context of your tax position, you may not have the full picture of your circumstances for the remainder of the particular tax year of sale to know what tax bracket you fall in to.
For example, some sellers will have difficulty determining whether they pay tax at 18% or 28%, as your income may not be clear for the remainder of the tax year, perhaps due to change of jobs, or redundancy, for example. Furthermore, submitting the provisional calculation and paying your corporation tax bill 30 days immediately after your sale date will bring added pressure, with HMRC penalties imposed if there is any delay.
Mirandus Accountants support landlords and individuals with investment properties with their capital gains tax planning, and as chartered tax advisers, we are aware of the latest tax rules coming ahead so you never pay more tax than you need to.
Mirandus can help
The actions you need to take now to protect your wealth will depend on your family’s needs for capital and income, as well as your current assets and your intended beneficiaries of your estate.
Looking at these in unison in the context of your IHT position requires expert advice, and Mirandus Accountants are here help.
Mirandus Accountants are your local accountants and tax advisers in Farringdon, Holborn, Clerkenwell, Blackfriars, Old Street and also Edinburgh & the Lothians, providing accounting services, tax returns, corporation limited annual accounting and are your trusted tax adviser, providing national and international advice.
You can contact us for a tailored solution to your unique business circumstances.Whether you are an individual, freelancer, contractor or you run a small or medium sized owner-managed business, sole trader or limited company, we can help to minimise your tax burden with our tax planning and tax advice services.We strongly recommend you speak with a tax and accounting specialist like Mirandus Accountants, a chartered advisory tax practice, who can provide expert advice for your business and personal tax planning needs.
