What are the changes to CGT payment rules from April 2020?

If you sold a residential investment property before 5th April 2020, you would have until 31st January 2021 to pay your capital gains tax bill as part of your HMRC self-assessment.

However, new rules coming in from 6th April 2020 onwards, mean you will only have 30 days from completion to report and pay the tax to HMRC.

Capital gains made on residential property are taxed at 18% in the basic rate and 28% in the higher/additional rate. However, in order to work out the tax on the gains, they are added to your total income for the tax year to work out the CGT liability.

Under the new rules from 6th April, you will therefore need to make a reasonable guestimate of your expected income by the end of the tax year, in order to guestimate your likely CGT bill! The actual figures will then come out in the wash in the final self-assessment for the tax year, with tax refunded/paid as appropriate.

This means that CGT on a gain made up to 5th April 2020, which is due to be paid by 31st January 2021, could be paid later than the tax on a gain made between 6th April 2020 and 31st December 2020 in the following tax year!

Go figure.