Got residential property? You need to be aware of Tax Changes

There are a number of changes that will impact residential property owners which came into force from 6th April 2020. We’ve outlined the main changes below:

Selling a UK property

If you own a UK residential property and you sell it with a taxable gain you must fill out a ‘UK land return’ and file it online within 30 days of the sale being completed. First filings and tax payments for some people could be due as soon as 6^th May. If you don’t file these on time, you’ll face a £100 penalty.

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Letting of residential property

If you let a residential property, then your ability to offset higher rate relief on mortgage interest against rental income has been reducing. Further changes from the 6th April mean that you could end up with higher taxable profits. We have options for holding properties to help you minimise the impact of this change.

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Principal Private Residence Relief (PPR)

If you’ve had a property that at some point has been lived in as your principal residence, the period of ownership you’ll get tax relief for has reduced, which could affect your Capital Gains Tax (CGT) bill.  So, if you’re planning a sale, please let us know and we can help you understand the tax you will need to pay or look at options to reduce it.

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Letting relief

It is quite common for people to buy a house, live in it, and then move out and let it.  However, if you’ve had a property that was your main residence that you have then let at some point, then you’ll be affected by letting relief changes. Letting relief will only be available to you if you as the owner have shared the residence with a tenant. For example, if you’ve let a room in your house to a lodger, whilst you’re still there, letting relief will be available on a proportion of the capital gain, but if you move from the house and let the whole property, then it won’t. Contact us if you’re unsure if this will affect you.

In the coming weeks we’ll be running webinars explaining the changes.

Don’t panic, it’s not too late, there are still potential options open to you to help to mitigate the affects. In the meantime, if you own or let property and want to discuss whether there are things to consider either when letting the property or for a planned disposal, please get in touch with Tax Director, Debbie Ince.