New tax return and pay tax early

Where a residential property is disposed of after 5 April 2020 and a chargeable gain arises, within 30 days of the sale completing, the seller will be required to;

• complete a Residential Property Return, and
• pay over the Capital Gains Tax at the same time.

This legislation has already been enacted within the Finance Act 2019.

Less relief for homeowners

From 6 April 2020, the final period of exemption for Private Residence Relief has been reduced to 9 months from the previous 18 months. In addition Lettings Relief is restricted and only available to those that lived in the property at the same time as the tenant.

This legislation is currently in draft within the Finance Bill 2019-20 now part of Finance Bill 2020 and has not yet received Royal Assent. Royal Assent may occur around July.

These changes could have costly implications and so clients thinking of selling residential property that may be caught by the changes may wish to take advice.

Act now:

If you are not already, please start letting your clients know about the changes. 

• For those looking to sell property they may need your help to calculate the tax and complete the tax return within 30 days of the competition of the sale.

• For some it may be worth taking advice and seeing what action can be taken to help reduce tax bills.

If you do not already you may wish to start encouraging clients with residential property to keep records and evidence of purchase costs, and significant improvements. These could help save significant amounts of tax and time when they come to sell the properties, especially given the tight timeframe to prepare the Tax Return and pay the tax.

Many residential landlords may already be keeping great records. It is worth encouraging the other landlords to start keeping similar great records now. Do you consider recording similar information for individuals living in their own home, just in case one day they start renting it out or there are possible tax consequences?

How we are helping

The changes to residential properties are a huge opportunity for accountants to help existing clients and win new clients, provide new services and increase their bottom line profits.

For all ProActivTax members

• We have created new pricing models to help you price the new services.
• We have created a new Residence Review Resource to help you market and deliver a new property review service to quickly consider the issues when selling residential property, identify possible tax savings, and quantify them. 

Full and Premium ProActivTax members

Full and Premium ProActivTax members have access to the Year End Planning pack for individuals, which includes news articles, flyers and videos to help raise awareness of the changes. If you are not already you can start using these to help raise awareness of the changes. 

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