BTL capital gains tax rules give landlords less time to pay

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When buy to let landlords sell their property, they are charged capital gains tax. If they are UK-resident landlords, they have had in the past between 10 months and 22 months to report the property sale and pay the tax.

In April 2015, the government changed the rules so that non-UK resident landlords were also charged capital gains tax, but they had only 30 days to pay the tax.

From April 2020, the 30-day period will also be applied to UK-resident landlords. During this time, landlords must make complex calculations on the capital gains tax and pay the tax before the one-month deadline. Capital gains tax calculations can be complicated, and mistakes can be made that result in too much tax paid. The landlord then has to wait until the end of the tax year to reclaim any overpaid tax. In-year tax reporting can only be estimated and not finalised until the end of the tax year.

Capital gains tax has to be calculated based on available knowledge, but by the end of the tax year, there could be a capital loss in the buy to let business, which cannot be factored into the calculations after a property sale.

Landlords who fail to report property sales in time could face late-filing penalties. Accountants with specialist knowledge of the buy to let business, commercial mortgages and property tax, can help landlords pay the correct taxes. During the initial period of the changes, HMRC may take a lenient approach to late filing.

BTL capital gains tax rules give landlords less time to pay

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When buy to let landlords sell their property, they are charged capital gains tax. If they are UK-resident landlords, they have had in the past between 10 months and 22 months to report the property sale and pay the tax.

In April 2015, the government changed the rules so that non-UK resident landlords were also charged capital gains tax, but they had only 30 days to pay the tax.

From April 2020, the 30-day period will also be applied to UK-resident landlords. During this time, landlords must make complex calculations on the capital gains tax and pay the tax before the one-month deadline. Capital gains tax calculations can be complicated, and mistakes can be made that result in too much tax paid. The landlord then has to wait until the end of the tax year to reclaim any overpaid tax. In-year tax reporting can only be estimated and not finalised until the end of the tax year.

Capital gains tax has to be calculated based on available knowledge, but by the end of the tax year, there could be a capital loss in the buy to let business, which cannot be factored into the calculations after a property sale.

Landlords who fail to report property sales in time could face late-filing penalties. Accountants with specialist knowledge of the buy to let business, commercial mortgages and property tax, can help landlords pay the correct taxes. During the initial period of the changes, HMRC may take a lenient approach to late filing.

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