There have been a number of developments for those letting UK property with new approaches to deadlines when paying Capital Gains Tax, a proposed extension on the time limit for investigating those with offshore funds and restrictions on Rent-a-Room relief.
Deadlines for Payment of Capital Gains Tax (CGT)
From April 2020, there will be a change in the amount of time within which CGT on gains made on residential property must be paid. UK residents currently pay CGT on the sale or disposal of any assets between 10 and 22 months as part of the standard self-assessment process. However, this is changing for the sale or disposal of residential property to a ‘payment on account’ towards an individual’s tax liability and must take place within 30 days of completion. The government aims to legislate this change in the Finance Bill 2018/19.
Extension of Offshore Time Limits
As part of Her Majesty Revenue and Customs’ continuing clamp down on tax evasion, the Finance Bill 2018/19 will detail an extension on the time limit for which Income Tax, Capital Gains Tax and Inheritance Tax payments can be investigated. This will specifically apply to the tax assessment time limit for non-deliberate offshore non-compliance. At present, the allowable limit for assessment is 4 years (6 years where carelessness causes non-payment of tax). The new law however, will see time limits increase to 12 years for Income Tax, Capital Gains Tax and Inheritance Tax.
Restrictions on Rent-a-Room Relief
Over the last 2 decades, the private rented sector has changed and grown massively, especially with the development of online marketplaces whereby individuals have access to a plethora of possibilities for renting, and equally, landlords can advertise rooms more efficiently and easily than ever before. As such, the rent-a-room relief which was first introduced in 1992 is now under review. The £7,500 relief was at the centre of consultations which closed on 31st August 2018, with a particular consideration on whether the relief continues to incentivise the renting of spare rooms within an individual’s home.