If you sell a Buy to Let property (or any other property that's not clearly your own home, for that matter) at a profit, it's pretty likely you'll have to pay Capital Gains Tax. At present that's paid via a Self Assessment Tax Return for the year in question. So if someone realises such a profit today, it's going to go on their tax return for the year ending 5 April 2020, and that means that the tax is payable in January 2021.
By the time the payment deadline comes around, it's not uncommon for there to be a problem. The seller hasn't got the money any more. It's reasonably common for people to labour under the misapprehension that if they use the money to buy another property, then the profit somehow isn't taxable. Or for them to believe that there's some interaction with mortgages and repayments that makes a difference. But those things aren't relevant in the slightest. Or they might simply think that there's no tax on selling a house. There is, unless it's unambiguously and genuinely your own home.
From 6 April 2020, therefore, the rules are changing. If you sell that BTL and make a profit, you've got to tell HMRC and pay the tax within 30 days. It'll be impossible for many people to be 100% sure of what that tax bill will be - the tax rate on capital gains in someone's basic rate tax band is currently 18%, and on gains above that 28%, and you might not know how much of your basic rate band is going to end up being used up by other things. But that's fine - you just pay your best estimate, and then the difference can be sorted out later on.
Of course, the people in the best position to warn sellers about this are the conveyancing solicitors. But a similar regime came in for overseas sellers of UK properties already, and we can tell you that there's no evidence at all that solicitors are advising sellers about it, and we've had to belatedly help more than one seller declare and pay the tax to HMRC.
Even if you're not planning on selling any time soon, one practical thing to do now might be to make sure you've got all the details of how much a property cost, easily and clearly available. That way, you won't be frantically looking for them in years to come when faced with an unexpectedly tight deadline for paying the tax.
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