Capital Gains Tax on Residential Properties from 6 April 2020

From today, 6 April 2020, anybody who sells a residential property in the UK, they will have 30 days to inform and HMRC of the transaction and to pay any money owed. For some this will mean they do not have to register for self-assessment.

Non-UK residents selling both residential and non-residential properties will have 30 days to tell HMRC whether there is any tax to pay or not and you will not be able to defer via self-assessment.

The type of transactions that need to be reported and capital gains tax paid are as follows:

· A property that has not been used as a main home

· A holiday home

· A property let out for people to live in

· A property inherited and not used as a main home.

If taxpayers do not tell HMRC within 30 days of completion they may receive a penalty and pay interest on any money owed.

HMRC will launch a new online service enabling the public to report qualifying property sales and to pay any Capital Gains Tax due.

Should you have any queries please call us at Churchill Tax Advisers, where we will provide answers.

Inheritance tax advice for wealthy landlords

This client was referred to us by another firm of accountants in London. The client is a retired medical professional with a large portfolio of properties that had been acquired over the past 20-25 years at considerably low value but are now worth significantly higher. The client’s estate was in excess of £6 million which meant there was a potential inheritance tax liability at 40%. Our tax specialists were able to suggest tax planning structure that allowed for the properties to be effectively passed onto the children via a partnership without having to pay capital gains or inheritance tax as well as stamp duty. The tax planning structure is complex and not effective overnight. Instead in line with the legislation and HMRC guidance, the structure takes several years to take full effect but the end result is that the inheritance tax liability is either eliminated or substantially reduced.

Tax planning for landlords

This case involved a group of new potential landlords / developers that needed tax advice on setting up a tax efficient structure for their future ventures. This was a wise decision as we have come across landlords and developers who do not think about tax advice until they have acquired the properties or in worst cases, until they have sold the property. Our team of tax specialists were able to put together an acquisition structure that prevents the new rules on tax relief on interest restriction from applying. In addition, as for the acquisition, we were able to suggest some reliefs that allowed a substantial reduction on stamp duty land tax (SDLT). The tax planning advice involved a holding company and subsidiaries and special purpose vehicles (SPVs) that can be used for different types of development / buy to let projects.

This tax planning implemented in advance can save significant tax liabilities in the coming years allowing the clients to use the excess cash (as a result of the tax planning) to be used in further acquisition / development projects.

Certificates of Tax Residence

HMRC have updated their guidance on how to apply for certificates on tax residence which is applicable for individuals and companies that have overseas income. In order to be taxed in the UK, the overseas tax authority will ask for proof of UK tax residence which is in the form of a “Certificate of Residence” issued by HMRC. Here is a link to the updated guidance on tax residence on HMRC’s website.

Capital gains tax planning for properties

This client came to us seeking advice on mitigating capital gains tax on a property. We considered the client’s personal and professional circumstances in detail and explored various options allowing for the potential tax liability to be mitigated. We finally developed a strategy using legislation, HMRC’s guidance and extra statutory concessions which if carefully implemented would allow for the majority of the capital gains tax liability to be eliminated.

Our analysis: This was a complex case and required specialist knowledge of the legislation and HMRC guidance on various reliefs and exemptions. Seeking tax advice from a specialist firm may cost a little but the tax savings are very much worth it.

Tax Investigations and Planning Seminar – 29 November 2018 – Glasgow

We will be hosting a free tax seminar at the Double Tree by Hilton, Strathclyde, Glasgow on 29th November. The following topics will be covered:

  • Tax investigations – latest developments
  • Tax case update
  • Budget 2018
  • Property tax planning

The seminar will provide specialist insight into the above areas. We are expecting bankers, business persons, solicitors and accountants to attend the seminar. The seminar qualifies for CPD points if these are relevant to you.

Refreshments and snacks will be provided.

If you would like to attend, please send an email to  seminar@churchilltaxconsultants.com to book a place.