On the 12th April, the government released a consultation document on the proposal to introduce a Capital Gains Tax (CGT) payment on account requirement in relation to residential property gains, as originally confirmed in the Chancellor’s 13 March written statement.
The consultation is a technical consultation on the design requiring a payment on account (and a ‘payment on account return’) to be made within 30 days of completion of the disposal of the property.
The changes will mainly affect those disposing of a second home or rental property. They will not apply where the gains are not chargeable to CGT. For example, where the gains are covered by principal private residence relief.
From April 2020, a payment on account of CGT will need to be made when a residential property is sold or otherwise disposed of (e.g. by giving it away). The payment will be credited against the person’s income tax and capital gains tax liability for the tax year.
Payment will be due within 30 days of the completion of the disposal. A special payment on account return confirming the disposal and the amount payable will also need to be sent to HMRC at the same time.
The existing CGT payment on account system for non-residents disposing of UK residential property will be extended from April 2020 so that a payment will be due where a person also makes self-assessment returns to HMRC.
HMRC have invited comments to be submitted to them regarding the consultation document before 6 June 2018 and we will be looking to make a representation to HMRC, via the ICAEW, before the deadline. Please contact Chris Watts or Karen Bowen if you wish to discuss this further.