Following from a bout of proposed tax changes, buy to let investors are being warned of upcoming changes which will be in effect as soon as April. In fact, from April 6th onwards, landlords wishing to sell a property which isn’t their main residence will have to follow a new set of rules.
Whilst this brings on board a number of changes for prospective sellers to be aware of, one that is particularly concerning regards capital gains tax (CGT). Specifically, the timeframe in which sellers are expected to pay CGT after completion has been reduced from 10 - 22 months down to just 30 days.
But what makes these changes so worrying is the extent to which unknowing parties will be penalised for failing to comply with these little known and confusing changes.
James Cook, a partner of the law firm Collyer Bristow, shares his concerns: “That leaves very little time to calculate the tax to be paid, report the gain, and pay tax. It is likely to catch out many second homeowners and investors who have either failed to plan for the tax charge or do not have the available cash.”
With an immediate £100 fine for anyone filing their CGT returns late, sellers can also expect additional penalties to the effect of £300 (or 5% of the tax due), if over 6 months late and again when over 12 months late.
So for second homeowners and investors looking to sell a property that is not their main residence, we would recommend seeking advice from an accountant first. Contact the Poole Townsend team today for expert financial advice.