REYNOLDS REPORT NOVEMBER 2019

From 6 April 2020 payment of Capital Gains Tax (CGT) liabilities arising from sales of residential properties by UK residents will be payable within 30 days of completion of the sale.

So, you had better start speaking to your accountant now….

Whilst promises of additional government spending, be it to fund extra policemen or free broadband, are announced to the World with bells and whistles, government schemes for generating additional revenue tend to have the media profile of a B2 Stealth Bomber (see photo) flown in low, under the radar, with the intention of inflicting maximum damage.

From 6 April 2020 a CGT return must be made within 30 days of completion for direct or indirect disposals of UK land on which a residential property gain accrues.  CGT must be calculated and paid on the date the return is due. Successive returns in the course of the same tax year will be cumulative with a final calculation of total CGT liability being performed in the usual way through the annual tax return/self-assessment system.

There will be penalties for late returns or failure to submit a return. Returns can only be amended in respect of events that have already occurred at the date the return was delivered.

CGT on residential property has become more complex, as records of the initial price paid for the property, and of costs incurred and enhancements made during ownership will have to be retrieved and reviewed.

In addition, while many properties will benefit from main residence exemption, some will have been a main residence at some point and not at others – with complexities created by absence due to work, divorce or separation and other common issues – meaning that relevant information will have to be gathered.

Finally, complex CGT calculations will be outside the skill set of most solicitors/conveyancers and will require input from an accountant or specialist tax advisers.

The 30 days’ time limit is also unlikely to be sufficient to gather up this information (or obtain such advice).  Furthermore, the prudent course of action is likely to be to allow solicitors/conveyancers to hold back an appropriate amount from proceeds of sale to cover the relevant liability – creating yet further complication where the funds are to be used to finance another transaction.

Clients would therefore be advised to obtain accurate advice on likely CGT liability well before completion.

In summary – talk to your accountant now.

If you don’t have an accountant that you already use, the Property & Commercial Team at Barrett & Co would be happy to put you in touch with people with whom we work regularly.   No kick back or referral fees for us in this – it simply helps us to complete transactions more smoothly (and with less stress for all concerned) if you have already obtained timely advice from people upon whom you and we can rely.

Of course, all of this could change after 12 December 2019 (and any subsequent Budget) but, given the eagerness with which all colours of the political spectrum are promising increases in spending, it would be unwise to bet that it will.

 

For more information on this please contact Martin Reynolds on 0118 958 9711 or email martin.reynolds@barrettandco.co.uk

 

Further reading

The Reynolds Report- What the Dragons Should Have Asked

Reynolds Report October 2019

And another thing I forgot to tell you about… Can a Disclosure Letter be rectified?

Shall I put my home in my children’s names?

Dealing with an Estate or Trust – top tips!

Tax reliefs on goodwill transfers quashed

 

"barrettandco" and "Barrett & Co" are trading names of Barrett & Co Solicitors LLP, a Limited Liability Partnership incorporated in England and Wales under registration number OC356263, with registered office at Salisbury House, 54 Queens Road, Reading, Berkshire RG1 4AZ. Barrett & Co Solicitors LLP is authorised and regulated by the Solicitors Regulation Authority www.sra.org.uk (SRA Number 549694).

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