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Finance Bill: UK residents’ residential property gains

Finance Bill: UK residents’ residential property gains

UK residents disposing of residential property 30 day payment & reporting rules allow reasonable estimates and apply only to UK properties.

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Rob Luty

Director, National Markets Private Client

KPMG in the UK

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Further to the consultation in July 2018 the Government is legislating in Finance Bill 2018-19 to introduce a 30 day payment and reporting window where UK residents dispose of UK residential property as well as replacing and extending the existing reporting and payment on account rules for non-UK residents. An entirely new Schedule in the Finance Act will replace the current rules in s12ZA to 12ZN (which covered non-UK residents) and s59AA of TMA 1970 (which covered UK residents).

What has changed?
Following consultation, the legislation has been changed to:

  • Allow reasonable estimates of valuations needed to compute the gain where the information is not available before the payment deadline;
  • Remove disposals of non-UK properties by UK residents from the rules; and 
  • Remove non-UK resident companies from the reporting requirements.

Overview of the rules 

The general rule will be that a return and payment of tax will be required within 30 days of a disposal of UK residential property.

The new reporting and payment requirements will not apply if the gain is not chargeable to CGT (e.g. gains are covered by Private Residence Relief, unused losses or the CGT Annual Exempt Amount). This is therefore mainly likely to apply where rental or second / additional properties are sold.

Gains on disposals reported on the return can be ignored when determining whether to file for self-assessment. Enquiries into the return will be able to be made separately from any self-assessment return that may be due.

UK residents

The proposals will come into effect on 6 April 2020 for UK residents including those that make a disposal in the UK part of a split year. This will significantly reduce the time for payments (currently 31 January following the end of the tax year in which the disposal is made) as well as increasing compliance requirements.

Non-UK residents

The requirements will come into effect from 6 April 2019 for the majority of non-UK residents (including those who make a disposal in the overseas part of a split year) disposing of UK land (including both residential and commercial property). However, for non-UK residents disposing of assets connected to a UK branch or agency though which they carry on a trade, profession or vocation, the rules will apply from 6 April 2020. Currently, rules introduced from April 2015 apply to non-UK residents disposing of UK residential property and for most circumstances require reporting (but not payment) within 30 days of completion.

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