CGT Changes On The Way For Expat Landlords

British capital gains tax rules for residents and expats are aligning in April 2020 – which means running a check over your finances sooner rather than later.

From April, CGT in the UK will have a major shake-up that means landlords who rent out property they live in during the time of ownership lose some valuable reliefs.

The government is also applying the expat 30-day limit to when CGT is paid on the disposal of a rented home.

Here are the three changes explained:

  • The 18-month tax-free grace period at the end of ownership is slashed to nine months
  • Lettings relief is scrapped. This valuable tax relief is worth up to £40,000 for each owner and can be claimed if they have lived in the property prior to sale. From April 6, 2020, only landlords sharing their home with a tenant can claim lettings relief.
  • CGT on property disposals are due within 30 days rather than the current period of up to 22 months after the sale

The changes impact any non-resident landlord with buy to let or houses in multiple occupation (HMOs) in the UK.

Any landlord who has lived in a home they are now renting should consider selling before April 5 to take best advantage of CGT lettings relief.

Non-resident companies disposing of residential property in the UK also face a special set of tax rules from April 6, 2020.

These companies must switch to paying corporation tax rather than income tax on profits and gains, which could be an advantage as corporation tax is charged at 17% from April 2020, rather than the 20%/40% income tax bands.

‘Property rich’ companies, which derive 75% of value from land in the UK, become liable for tax on indirect disposals.

£5,000 fine over letting agent muddle

Expat landlords should check their tenancies to make sure their letting agents are not flouting house in multiple occupation (HMO) licensing or health and safety rules.

The warning follows a case before magistrates in Mold, near Wrexham, that saw a landlord couple fined for housing offences that occurred while they were expats teaching in China.

Agents Beresford Adams let their buy to let home to four tenants who were counted under HMO rules as three separate households. The error meant the home needed a licence and £21,000 spent on upgrading fire and other safety precautions.

The owners were fined £5,000 after pleading guilty to letting an unlicensed HMO.

The agents were fined £22,000 at an earlier hearing after admitting three housing offences and must pay £2,819 costs and a £107 victim surcharge.

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