When you make a gain from selling any major asset, this may result in a tax bill. Each individual has an annual exempt amount for gains, currently £12,000, which is entirely separate to the ordinary personal allowance for income tax. Gains above this allowance are subject to Capital Gains Tax (CGT), with the tax rate being dependent on other income. 

In the past all such gains have simply been reported on a tax return, with the tax arising falling due for payment on 31st January following the tax year end. For most asset sales, this will continue to be the case in the future. However, for sales of residential property after 6th April 2020, there will be a significant change. Gains from such disposal will now need to be reported within 30 days of the sale, with an estimate of the CGT arising becoming due on the same date. This estimate should be based on the information available about a taxpayer’s other income and gains at the date of disposal. Whilst the date of exchange of contracts determines when a gain is taxable, this filing deadline will be based on the date of completion. A new online property disposal return is to be made available for this purpose. 

If there is a loss on the disposal, or the gain is small enough to be covered by the annual exempt amount, then no return will be expected. It will also not be necessary to file a return where the gain is exempt for any reason, such as having been the taxpayer’s own residence for the whole period of ownership. 

The gain will continue to be reported on the sellers’ tax returns as in previous years. Unless all of their other taxable income for the year was known at the time of the sale, this is likely to result in a different figure for the CGT due. In a similar manner to tax taken under PAYE, the amount paid from the 30 day return will be offset against the total due. If the amount paid in advance exceeds the final amount due, then the difference will be refunded.

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