Capital Gains Tax Changes on residential properties: What You Need to Know

Capital Gains Tax (CGT) rules are undergoing significant changes in 2024, affecting a broader range of taxpayers. The CGT annual exempt amount has been drastically reduced to £3,000 for 2024/25, down from £6,000 in 2023/24 and £12,300 in 2022/23. This reduction is expected to bring an additional 260,000 individuals and trusts into the CGT net.

For those dealing with UK residential property disposals, the 60-day reporting rule adds complexity. This requires setting up a UK property account and paying tax within 60 days of sale completion, separate from self-assessment reporting. It’s crucial to use the correct 14-digit reference number starting with X for payments to avoid allocation issues.

Late reporting can result in substantial penalties, starting at £100 and increasing to £300 or 5% of tax due (whichever is higher) after 6 months, with a repeated penalty after 12 months. The current interest rate for late payments stands at 7.75% per annum. Recent developments in principal private residence relief may also affect eligibility and application.

Given these changes and the potential for costly mistakes, it’s essential for taxpayers to stay informed and consider seeking professional advice, especially when navigating the tight reporting deadlines and complex rules surrounding CGT in 2024.