New Tax Rules to Hit 1 in 10

According to a recent report by the thinktank the Resolution Foundation, second home ownership has gone up 30% since 2000, with one in ten adults in the UK, or 5.2 million people now owning a second home. One in four of the population own no property at all.

Samantha Hawkins is a specialist personal tax adviser at Thatcher + Hallam. However, Samantha believes that very few of those millions of second home owners realise that next month new tax rules coming into effect are likely to have a major impact on the sale of those properties that are not main residences.

‘Capital Gains Tax (CGT) is payable on the sale of the property that has not been the taxpayer’s main residence throughout the period of ownership,’ explains Samantha. ‘However, the current rules mean that the taxpayer is not required to report and pay tax on any gain until 31^st January following the tax year in which the property is sold. This can result in a period of nearly 22 months from the date of sale, before payment of CGT has to be made.’

‘However, as from the 6^th April 2020 all of this changes,’ explains Samantha. ‘For disposals of UK residential property exchanged on or after this date, sellers will need to report and pay the full estimated CGT liability on the disposal within 30 days of the completion date. These new time scales affect individuals, trustees and personal representatives. For many sellers the gain will also need to be included on their Self-Assessment return.’

Samantha adds that changes to Private Residence Relief are also being introduced from 6^th April 2020 including a reduction in the Private Residence Relief (PRR) final exemption period from 18^th months to 9 months and a significant restriction to the lettings relief available where a let property has been occupied as a main residence for part of the period of ownership.

Anyone wanting further information on these proposed tax changes can contact Samantha direct on 01761 414646 or at shawkins@th-law.co.uk