Reporting Residential Property Sale to HMRC - McGinty Demack

Reporting Residential Property Sale to HMRC


Selling a Residential Property and reporting the Sale to HMRC

In the Budget the Chancellor extended the period for Zero stamp duty on property purchases up to £500,000 until the 30th June 2021. After this date the zero threshold will reduce to £250,000 up to the 30th September 2021 and then drop down to £125,000.

This is great news for buyers and a further boost to the housing market.

Please remember that if you are buying a second property then the additional stamp duty still applies at a 3% surcharge.

Property bought in a company however will benefit from the new rates up to the 30th June 2021 provided the property is under the £500,000 limit.

Ask us for advice on this aspect if you are looking to buy a residential property.

What if you are a seller?

As a seller this should increase your chances of selling your property but beware if the property is not your main residence and you have potential capital gains tax to pay you must report the sale within 30 days to HMRC.

This new legislation came in for disposals after 6th April 2020.

When do I have Capital Gains Tax To Pay?

If the property is your main home, then you will not have to pay capital gains tax as it qualifies for Principle Property Relief.

If however you own another residential property perhaps you have bought a holiday home that just the family uses, you have bought a property for your children to live in whilst at university or you have residential property that you let out, then the new legislation may apply to you.

Capital Gains Tax is calculated based on the price you sell the property for after allowing for the price you paid for the property less other deductible costs.

Will It Apply to Me?

The flow chart below is a simple guide as to whether you will have to report the sale to HMRC.

What to Do to report the Gain

 

Step One

Work out if you have any capital gains tax to pay on the property. To do this you will need the following information:

  • calculations for each capital gain or loss you report
  • details of how much you bought and sold the asset for
  • the dates when you took ownership and disposed of the asset
  • any other relevant details, such as the costs of disposing of the asset and any tax reliefs you’re entitled to

If you have a gain then move on to :

Step Two

Create a Capital gains Tax Gateway account with HMRC if you do not already have one

https://www.tax.service.gov.uk/capital-gains-tax-uk-property/start/report-pay-capital-gains-tax-uk-property

Step Three

Log into the gateway and report your gain

This must be done within 30 days of the property disposal date.

Step Four

HMRC will send you a letter advising you what you owe and giving you a reference number and details of how to pay

Do I have to do anything else?

Yes, if you complete a self-assessment tax return the gain details should also be recorded on to this return as part of your normal self-assessment completion.

Don’t wait until the deadlines for your self-assessment return as you may then face interest on the capital gains tax due.

 

This is a complicated area of tax law and if you need any advice on this we can assist and complete the calculations and the returns on your behalf.

We can provide a quote for this work to be done for you – Obtain Quote Now

For further information contact info@mcgintydemack.co.uk or call 0800 1223 633

We are here to help you.

 

 

Residential Property Sale

Borrowers of Bounce Back loans given six more months for repayments


Businesses that took out government-backed Bounce Back loans to get through the coronavirus (COVID-19) pandemic will now have greater flexibility to repay their loans, the government has announced.

The Pay as You Grow repayment flexibilities now include the option to delay all repayments for a further six months. This means businesses can choose to make no payments on their loans until 18 months after they originally took them out.

Pay as You Grow will also enable borrowers to extend the length of their loans from six to ten years, which reduces monthly repayments by almost half.

They can also make interest-only payments for six months to tailor their repayment schedule to suit their individual circumstances.

The Pay as You Grow options will be available to more than 1.4 million businesses which took out a total of nearly £45 billion through the Bounce Back Loan Scheme (BBLS).

The Chancellor of the Exchequer, Rishi Sunak, said:

‘Businesses are continuing to feel the impact of extended disruption from COVID-19, and we’re determined to give them the backing and confidence they need to get through the pandemic.

‘That’s why we’re giving Bounce Back loan borrowers breathing space to get back on their feet, through greater flexibility and time to repay their loans on their terms.’

Internet link: GOV.UK news British Business Bank

Online service opens for VAT deferral scheme


HMRC has announced that businesses that deferred VAT payments last year can now join the new online VAT Deferral New Payment Scheme to pay it in smaller monthly instalments.

To take advantage of the new payment scheme businesses will need to have deferred VAT payments between March and June 2020, under the VAT Payment Deferral Scheme. They will now be given the option to pay their deferred VAT in equal consecutive monthly instalments from March 2021.

Businesses will need to opt-in to the VAT Deferral New Payment Scheme. They can do this via the online service that opened on 23 February and closes on 21 June 2021.

Jesse Norman, Financial Secretary to the Treasury, said:

‘The Government has provided a package of support worth over £280bn during the pandemic to help protect millions of jobs and businesses.

‘This now includes the VAT Deferral New Payment Scheme, which will help provide businesses with the breathing space they may need to manage their cashflows in the weeks and months ahead.’

Internet links: GOV.UK guidance GOV.UK press release

HMRC clarifies off-payroll rules


HMRC has published a briefing on its approach to the changes to off-payroll working rules, commonly known as IR35, which will be introduced on 6 April 2021.

Reiterating its advice from last year, HMRC has confirmed that it will not issue penalties for inaccuracies in the first 12 months of the regime, unless there is evidence of deliberate non-compliance.

HMRC also confirmed that it will not use information it receives under the expanded regime to open new compliance enquiries into returns for tax years before 2021/22, unless there is reason to suspect fraud or criminal behaviour.

The new tax rules will see the extension to medium and large organisations in the private sector. These reforms will shift the responsibility for assessing employment status to medium and large organisations engaging individuals via a personal services company.

Internet link: GOV.UK

Domestic VAT reverse charge comes into effect on 1 March


The twice-delayed introduction of the domestic VAT reverse charge for construction services came into effect on 1 March 2021.

The change was originally scheduled to come into effect from 1 October 2019 but was deferred for 12 months after industry bodies highlighted concerns about the lack of preparation and the impact on businesses.

It was put back another five months due to the impact of the coronavirus (COVID-19) pandemic on the sector. The change applied from 1 March 2021 and overhauled the way VAT is payable on building and construction invoices as part of a move to reduce fraud in the sector.

From March 2021, the person receiving the supply of services, not the supplier of services, who accounts for the output VAT on those services. The recipient deducts VAT due on the supply as input VAT, subject to normal VAT rules. In most cases, no net tax on the transaction will be payable to HMRC. This new procedure will apply right the way up the CIS supply chain until you reach end users/intermediary suppliers, the supply defaults to normal VAT rules, so long as the end user/intermediary supplier correctly evidences their status.

The Domestic Reverse Charge (DRC) applies to most supplies of building and construction services from 1 March 2021, which are:

  • standard or reduced rated supplies
  • where both parties are registered for VAT in the UK
  • and payments for the supplies are required to be reported via the Construction Industry Scheme.

The DRC does not apply to:

  • zero rated supplies
  • services supplied to end users or intermediary suppliers, so long as these have provided written confirmation of their status to the supplier
  • employment businesses supplying either staff or workers.

Please contact us for advice on the DRC and how it impacts your business.

Internet link: GOV.UK

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