Changes to Payment of CGT on Residential Investment Property Explained

As the end of the year approaches, anyone who needs to complete a self-assessment tax return should ensure they’ve declared everything required by HMRC. If you sold a rental property in the past 12 months, don’t forget to report it. Taxpayers have until 31 January 2021 to declare any profit from selling a UK residential property (not their main home) during the 2019–2020 financial year and pay the Capital Gains Tax (CGT) due.

End of Self-Assessment CGT Declarations

The 2020–2021 tax year is the last in which CGT on property sales must be paid as part of the self-assessment process. This makes it essential for property owners to understand the new requirements and ensure compliance moving forward.

Capital Gains Tax and Its Impact on Landlords

Since 6 April 2020, changes to CGT declaration and payment processes have taken effect, impacting landlords who sell rental properties. UK residents making a taxable capital gain must now use the online service to report it to HMRC and pay the due tax within 30 days of completion. For non-UK residents selling UK land or property, reporting via the online service is mandatory—whether or not a gain has been made.

What Landlords Need to Know About New CGT Rules

From 2020–2021 onwards, property sellers must:

• Use HMRC’s online service to declare capital gains and pay any tax owed within 30 days of selling the property.
• Report any CGT liabilities in their self-assessment tax return, though any payments already made won’t count toward their annual tax return bill.

What Is Subject to Capital Gains Tax?

Landlords and property owners must pay CGT on any profit exceeding their tax-free allowance when selling:

• Most personal possessions worth over £6,000 (excluding cars).
• Their main home if it has been rented out or used for business.
• Shares.
• Business assets.

Staying Compliant with HMRC Regulations

With these new changes in place, landlords and property owners must adapt to the updated CGT reporting process. Understanding the deadlines and using HMRC’s online system will help avoid penalties and ensure a smooth tax reporting experience.