Let’s get ready for new CGT payment for residential property

Residential property

From 6th April 2020, HMRC is introducing new Capital Gain Tax (CGT) payment on account when a chargeable residential property is disposed by individuals or trusts.

The payment on account return is due for filing and payment within 30 days of completion, not when contracts are exchanged which is quite similar to current system for stamp duty land tax when purchasing a property.

This regime applies to capital gains arising from

  • Buy to let properties
  • Second houses
  • Overseas houses/holiday lettings.

However, this rule will not apply to companies with residential property as they will pay corporation tax instead of CGT. Also commercial property owned by individuals or trusts will not fall under this rule.

The biggest drawback of this law is that it will require filing of multiple returns if landlords or trusts intend to sell multiple properties throughout the tax year. This can be massive administrative burden with additional cost for both clients and accountants as well.

It was initially thought to be the responsibility of solicitors to file and deduct CGT at source from the sale proceeds as they do for stamp duty land tax but this is not going to happen. Hence, the clients have to liaise with their accountants promptly to avoid hefty late filing penalty.

Finally, there is no need to file CGT return within 30 days of completion if there is no CGT payable to HMRC.

For more information or advice, please contact us.

By Roshan Malla


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Reddy Siddiqui is the trading name of Reddy Siddiqui LLP, a limited liability partnership. This firm is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Registered office is 183-189 The Vale, London W3 7RW. Registered in England and Wales No. OC417809

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