A number of new rules could see an increase in tax burden for many, early payment of tax for some, and extra red tape in the form of a new Tax Return purely for the property sale.
Significant red tape and costs
The first issue is where residential property is sold and a taxable gain arises, the seller will be required to complete a Residential Property Return to HM Revenue & Customs within 30 days of the sale completing and pay over the Capital Gains Tax at the same time.
This alone brings forward significantly the payment of tax by up to 21 months depending upon when the property is sold, compared to the old rules. This can be a serious cash flow disadvantage for many, especially if the money paid for the property is being received by instalments over a number of months.
The other big concern is the time pressure to gather together the appropriate information to be able to correctly calculate the possible tax due, and the complexities of the calculations. It is going to be very easy for individuals selling property to forget or miss details that could then increase their tax burden.
Significant tax bills
The second big issue is where the seller has not lived in the property as their main home throughout the period of ownership, and perhaps has rented it out, then the potential tax liability on the sale could be much higher than anticipated.
If you are looking to sell residential property please start gathering together evidence of all costs acquiring and improving your residential property over the years, details of the potential proceeds and come and see us. We can calculate the potential position and advise your accordingly.
Our new Residence Review Service
We are today launching our Essential Residence Review service. We will be able to review your circumstances and quantify the potential tax that may arise. We can report any disposal on your behalf.