Leading Weybridge accountancy firm, TWP, is calling on landlords, property investors and home sellers to prepare for new changes to taxation, which could result in additional payments from the disposal of their home.
From April 2020, the date at which Capital Gains Tax (CGT) must be paid on gains arising on the sale of residential property is changing.
After this date, taxpayers will have only 30 days to file their return and make an advance payment towards their tax bill.
This differs drastically from the current rules, which allows people to pay CGT on the disposal of a property up to 22 months after the sale as part of the self-assessment cycle.
At the same time, Lettings Relief will be restricted to property owners who share occupancy of a property with their tenant at the point of sale.
At the moment, taxpayers who let a property that either is currently or used to be their main residence and then sell that property can claim Lettings Relief of up to £40,000, with up to double that being available to a married or civil partnered couple.
Key changes also come into effect next April in respect of Principal Private Residence Relief (PPR), which will shorten the Final Period Exemption (FPE).
This means that landlords will be exempt from paying CGT on the gains made in the final nine months of ownership, instead of the final 18 months, as is currently the case.
There are however no changes to the 36 months currently available to the disabled or those in a care home.
Andrew Goddon, a partner at TWP, said: “These changes to taxation follow on from several other changes in recent years, including restrictions to relief on mortgage interest, which have made property investment less attractive to many.
“What is more concerning about these changes is that they have the potential to affect the growing number of ‘accidental landlords’, i.e. those people who have lived in a house for years, but who have decided to rent out their home before they sell it.”
Despite the changes to property in some circumstances, property investment could still offer advantages over other forms of investment, according to Andrew, but he encouraged people to seek out professional financial advice before investing in the market.
If you are concerned about the changes to the taxation of property, please visit www.twpaccounting.co.uk