Residential property sellers with taxable gains must beware major changes to the capital gains tax (CGT) rules, the Chartered Institute of Taxation (CIOT) has warned.
New rules which are due to be introduced on 6 April this year mean those liable for CGT must send a new standalone online return to HMRC and settle the tax due within 30 days of completion of the sale.
The current rules allow taxpayers until the self assessment tax deadline of 31 January after the tax year in which the disposal is made to complete a tax return and pay the CGT.
Depending on the timing of the sale, sellers currently have between ten and 22 months to settle outstanding CGT. Under the new rules, the new 30-day deadline means individuals have less time to calculate CGT, report the gain and pay the tax.
Commenting on the changes, John Bunker, Chair of the CIOT's Private Client UK committee, said: 'This is a seismic change for property owners with taxable gains on their residential properties.
'Rather than thinking about an annual compliance process, property owners need to have their records up to date in advance of the sale so that the 30-day deadline can be met, and penalty charges avoided.
'Make sure that full property details are all readily to hand, including the date when the property was acquired, the acquisition cost and details of any improvements made over the period of ownership. In some cases, professional valuations may be needed.'