Changes to Capital Gain Tax on Residential property

Those selling residential property in the UK need to be ready for changes to Capital Gains Tax (CGT) rules from early April, one of the NI’s most respected accountancy and management consultancy firms is advising.

There are a number of changes to taxation legislation due to be implemented, and these taxation changes will affect those with rental property or second homes as well as impacting estates liable for inheritance tax. Nicola McCartan, a member of the Chartered Institute of Taxation at M. B. McGrady & Co Chartered Accountants looks ahead to the new changes and determines whether these changes are likely to affect you.

“Important changes are coming into effect which mean second homeowners and buy-to-let landlords may be subject to capital gains tax payments sooner than anticipated. The legislation was introduced in the Finance Bill 2019-20 and will be effective from April 2020” comments Nicola McCartan.

What is changing

On 6th April 2020, capital gains tax (CGT) on property is changing. This is likely to have a significant effect on the amount of tax you hand over to HMRC following a property disposal.

There will be three significant changes to the current legislation:

1. Capital Gains Tax Payments

  • Currently: individuals selling a residential property will not be required to pay any Capital Gains Tax (CGT) after the completion of the sale until 31st January 2021. Payments can be made before that date, but the full amount is not required until January 2021.
  • From 6th April 2020: UK residents who sell a residential property that gives rise to a CGT liability must send a new standalone online return to HMRC and pay the tax due within 30 days of completion of the sale.

This is a significant departure from the current filing and payment timeframe where taxpayers have until the self-assessment tax deadline of 31 January after the tax year in which the disposal is made, to complete a tax return and pay the CGT.

2. Lettings Relief

  • Currently: if a property was at some stage an individual’s main residence and also has a period when it was let, there is potential CGT relief on up to £40,000 of any gains. Where the property is jointly owned, each owner would receive the £40,000 relief.
  • From April 2020: this relief will only apply to landlords who share an occupancy with their tenants.

3. Private Residence Relief

  • Currently: where a property has been a main residence at some point, the last 18 months of ownership, even when you are not living there, are treated as a private residence relief period and exempted from tax.
  • From 6th April 2020: this period will be reduced to nine months.

Want to know more?

The 2020/21 tax year begins on 6th April 2020, which is when changes to Inheritance Tax, Capital Gains Tax and Mortgage Interest Relief will come into force.

With offices in Belfast, Downpatrick and Newtownards, M. B. McGrady & Co Chartered Accountants represents a diverse range of clients from across Northern Ireland.

For more information please contact Nicola McCartan, Chartered Tax Advisor and Property Sector Specialist at or visit