Bradford accountancy firm Watson Buckle is calling on landlords and property investors to review their plans ahead of changes to taxation.
After April next year, taxpayers will have only 30 days to file their Capital Gains Tax return on gains arising on the sale of residential property, and make an advance payment towards their tax bill.
This differs drastically from the current rules, which allows people to pay CGT on the disposal of a property up to 22 months after the sale as part of the self-assessment cycle.
At the same time, Lettings Relief will be restricted to property owners who share occupancy of a property with their tenant at the point of sale.
At the moment, taxpayers who let a property that either is currently or used to be their main residence and then sell that property can claim Lettings Relief of up to £40,000, with up to double that being available to a married or civil partnered couple.
Key changes also come into effect next April in respect of Principal Private Residence Relief, which will shorten the Final Period Exemption.
This means that landlords will be exempt from paying CGT on the gains made in the final nine months of ownership, instead of the final 18 months, as is currently the case. There are however no changes to the 36 months currently available to the disabled or those in a care home.
Mark Wilcock, Joint MD at Watson Buckle, says that planning is key to managing taxpayers’ investments in a tax-efficient way.
“The upcoming changes to taxation are on top of several other changes in recent years, which have made property investment less attractive to many,” Mark said.
“What is more concerning about these changes is that they have the potential to affect ‘accidental landlords’, i.e. those people who have lived in a house for years, but who have decided to rent out their home before they sell it.”
Mark added that despite the changes, in some circumstances property investment could still offer advantages over other forms of investment, but encouraged people to seek out professional advice before plunging into the market.