Although the Brexit process continues to throw a spanner into the normal workings of government, there are a few certainties from a tax point of view that will be effective from April 2020. A few property related changes are noted in this article:
• Presently, where you sell a residential property that at some point during the time you owned it was your principal private residence, the last 18 months of ownership are exempt from capital gains tax, regardless of the use of the property during that period. From April 2020, this will be reduced to 9 months.
• If you sell a home that has both been your principal private residence and let out during your ownership of it, there is a letting relief you can claim that can have a significant impact on any capital gains tax payable. For properties sold on or after 6 April 2020 you can only take advantage of this lettings relief if at the time it was let you were in shared occupancy of the property with your tenant.
• From April 2020, all finance costs, incurred by UK residents that let residential property, will be disallowed as an expense of their property business. Instead, tax relief on the disallowed finance charges will be restricted to a basic rate (20%) tax credit. This process started on a phased basis on 6 April 2017 and will complete on 5 April 2020.
• UK residents that sell land or property in the UK, after 5 April 2020, will need to prepare a formal CGT computation and return this to HMRC within 30 days of the relevant sale. They will also need to pay any tax due in the same period.
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