This article looks at the new CGT rules in practice, particularly in regard to to the sale of property in the administration of an estate.
Following changes to the reporting requirements and payment of Capital Gains Tax within 30 days of the date of completion of a property, that came into effect on the 6 April 2020, we have successfully acted for both existing and new clients to the firm.
In addition to the sale of second homes, investment properties and properties held in trust, since April 2020 we have also dealt with a number of properties being sold as part of the administration of an estate. The current fast moving property market has seen a rise in property prices and consequently many properties being sold within an estate have increased in value since a probate valuation was originally obtained. This can then lead to a potential Capital Gains Tax charge arising.
The consequential gain, if liable to Capital Gains Tax, must be reported to HMRC and the tax due paid within 30 days of the date of completion of the sale. Although HMRC were initially lenient with regard to penalties on properties that were sold up until the 30 June 2020, from the 1 July 2020 penalties are now issued for late returns and payments. Our experience in the current market is that the time between exchange and completion is often as short as a day or two, leaving little time to calculate whether a Capital Gain has arisen and if it has, thereafter ensuring that the consequential reporting and payment of tax meets the 30 day deadline.
If you are dealing with the administration of an estate in which you are selling a property or selling a property that is liable to CGT please contact us