Some changes are about to take place that will affect how UK resident and nonresident individuals who own property personally, or through a company, pay tax.
Payment window for gains
From April 2020, you must make a payment on account of capital gains tax (CGT) when you dispose of a residential property situated in the UK or overseas. Payment will be due within 30 days of completion of the disposal.
Payments on account will not be due where full private residence relief is available, so the change will mainly affect those disposing of a second home or a rental property.
It will be essential to have all the information necessary for calculating the gain readily to hand. This can be a particular issue where the property has been enhanced, especially if you carried out much of the work yourself.
Non-residents owners of UK property
If you are non-resident in the UK, you are already taxed on gains made when disposing of UK residential property. From April 2019, this liability will be extended to:
■ Non-residential property Property values will be rebased to April 2019, so that only subsequent gains will be taxed. However, the original property cost can be used if beneficial
– such as where rebasing results in a gain where there is an overall loss. Unlike residential property gains, there will be no option to time apportion a gain over the period of ownership.
■ Indirect disposals For example, the disposal of shares in ‘property rich’ companies – where at least 75% of a company’s asset value is represented by UK property.
If the changes affect you, you should review your current holding structures and any plans for future acquisitions/disposals. At the very least, you need to arrange for April 2019 property valuations.