Landlords, don't forget the changes to CGT - they apply to you!
Mary-Anne Bowring 17/04/2020
1897
A number of tax changes that impact landlords are now in force Although COVID-19 is uppermost in all our minds at the moment, it’s important to remember that all the same legislation still applies to the way you operate your rental property – and so do tax changes. For landlords, this April sees a big change to the rules that govern Capital Gains Tax as well as a new regime for lettings relief. From 6 April, new legislation is in force that means anyone selling a property eligible for capital gains tax (CGT) must pay what is due within 30 days of completing the sale. Up until now, anyone who paid tax via a self-assessment tax return could report a sale and pay what they owed via their tax return. That gave sellers a period of between 10 and 22 months to find the money. Now, those days have gone and anyone who doesn’t comply with the new rules could find themselves paying hefty charges. Tax specialists Royds Withy King explained the implications in the press last week, saying: “Where CGT is due, the change could mean that sellers have to get funds in place to cover the CGT liability before the sale is completed…30 days is not very long at all. This could be a particular issue where there are large historic gains.” So it's important not to get caught out. Other reforms coming into force this month are:
- Lettings relief, whereby landlords could claim tax relief on any let property that used to be their main residence, can now only be claimed for the period during which the property is shared with a tenant.
- Principal private residence tax relief, which applies to landlords selling a property which was previously their main residence, is reduced from 18 to nine months.
Also, the final stage of Section 24 of the Finance (no 2) Act 2015 has now been enacted. This amendment to UK tax law means the amount of income tax relief landlords receive for residential property finance costs is now restricted to the basic rate of tax. The changes have been phased-in since April 2018 and mortgage tax relief for buy-to-let landlords is now replaced by a tax credit of 20%. This change applies to:
- Landlords who are UK residents with residential rental properties, regardless of location
- Non-UK resident landlord with residential rentals based in the UK
- Partnerships and Trusts with residential rental properties
If these changes apply to you, click here for detailed information on CGT as it affects landlords and an explanation of the new rules www.planetrent.co.uk Why not READ our Property Blog: www.ringleypropertyblog.co.uk
Planetrent Properties
info@planetrent.co.uk
0208 0599 550 (for sales)
Under Offer: This term applies to a property where the landlord is considering an offer but remains on the market. It implies that further offers may still be considered until the landlord formally accepts or declines the current offer.
Let Agreed: This term indicates that a landlord has provisionally agreed to enter into a rental agreement with a prospective tenant, pending additional checks and referencing. It doesn't require the prospective tenant to have paid a holding deposit.
Let: This term signifies an established binding rental agreement between the landlord and tenant.
For both lettings and sales, the guidance addresses additional terms:
New On The Market: This term is used for a property not advertised since its last sale or rental. It should only be used for a brief period.
New Instruction: It applies to a property assigned to an agent for marketing recently, even if it was previously listed with another agent without being sold or rented.
New and Exclusive: This term refers to a property that is either new on the market or a new instruction, exclusively available through a specific agent or portal.
New Method of Sale/Let: This term is used when a property is being marketed for sale or rent using an alternative approach to the original advertisement, such as transitioning to an auction or sealed bid.
Reduced: This term indicates that a property's price has recently been reduced. The reduction should be genuine and comply with the Chartered Trading Standards Institute's guidelines on pricing practices.