Letting Relief:
Currently if you sell a residential property which was at one time your main residence but has then been rented out for a period of ownership, it is possible to deduct ‘letting relief’ of up to £40,000 from any capital gain.
Letting relief will no longer be available from 6 April 2020. The only exception will be if the letting of the property occurred while the owner was living in the property.
Final period of Ownership:
From 2014 the last 18 months of ownership of the property are treated as ‘deemed occupation’ and subsequently qualifying for principal private residence (so this part of the gain is exempt from tax).
From 6 April 2020 tax relief is limited to the final 9 months of ownership.
Date of Capital Gains Tax Payment to HMRC:
Currently any capital gains tax is reported via Self-Assessment on an individual’s personal tax return and tax is payable on 31 January following the end of the tax year where the disposal takes place.
From 6 April 2020 a provisional calculation of the gain must be submitted to HMRC within 30 days of completion of the sale. At the same time payment of the tax due must be made. The gain will still need to be recorded on your tax return, with any final adjustment for any over/underpayments based upon the final capital gains tax calculation.
Tax Relief on Mortgage Interest:
The reforms to tax relief on mortgage interest continue, and from 6 April 2020, if you are paying interest on a mortgage on a rental property, the allowable amount as an expense deduction is now 0% of the interest paid, compared to 75% in 2019/2020. A basic rate tax reducer is then allowed on the full 100%.
Letting Relief:
Currently if you sell a residential property which was at one time your main residence but has then been rented out for a period of ownership, it is possible to deduct ‘letting relief’ of up to £40,000 from any capital gain.
Letting relief will no longer be available from 6 April 2020. The only exception will be if the letting of the property occurred while the owner was living in the property.
Final period of Ownership:
From 2014 the last 18 months of ownership of the property are treated as ‘deemed occupation’ and subsequently qualifying for principal private residence (so this part of the gain is exempt from tax).
From 6 April 2020 tax relief is limited to the final 9 months of ownership.
Date of Capital Gains Tax Payment to HMRC:
Currently any capital gains tax is reported via Self-Assessment on an individual’s personal tax return and tax is payable on 31 January following the end of the tax year where the disposal takes place.
From 6 April 2020 a provisional calculation of the gain must be submitted to HMRC within 30 days of completion of the sale. At the same time payment of the tax due must be made. The gain will still need to be recorded on your tax return, with any final adjustment for any over/underpayments based upon the final capital gains tax calculation.
Tax Relief on Mortgage Interest:
The reforms to tax relief on mortgage interest continue, and from 6 April 2020, if you are paying interest on a mortgage on a rental property, the allowable amount as an expense deduction is now 0% of the interest paid, compared to 25% in 2019/2020. A basic rate tax reducer (at 20%) is now claimed on all of the mortgage interest paid between 6 April 2020 to 5 April 2021.