More Changes to Capital Gains Tax: What You Need to Know
Capital gains tax is undergoing significant changes, and it’s crucial to understand how they might affect your finances. To help you stay compliant and avoid unexpected costs, we’ve outlined the key updates below — and what you should do next to prepare.
How Does Capital Gains Tax Work Right Now?
Currently, individuals must report any capital gains through their self-assessment tax return. So, if you sold an asset between 6 April 2019 and 5 April 2020 and made a profit, that gain needed to be declared. The tax due would then be payable by 31 January 2021.
What’s Changing from April 2020?
From the 2020/21 tax year, the rules are shifting — and fast. Now, if you sell residential property after 6 April 2020, you’ll need to pay any capital gains tax much sooner than before.
The key takeaway? The deadline for payment is no longer linked to the self-assessment deadline — it’s been drastically shortened.
New 30-Day Deadline: Don’t Miss It
Under the new rules, you’ll have just 30 days from the date of completion to:
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Submit a provisional calculation of your capital gain
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Pay the estimated tax due
You’ll still need to include the gain on your annual self-assessment return, where any remaining tax will be settled.
This Affects Everyone – Even If You Don’t Do Self-Assessment
This 30-day rule applies to all individuals, whether or not you usually complete a self-assessment return.
Not currently registered with HMRC? You won’t need to register right away. However, you must:
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Estimate and pay your tax within 30 days
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Review and adjust your calculation after the tax year ends
Failing to meet the deadline could result in penalties — although HMRC has yet to confirm the exact amounts.
Estimating Your Capital Gains Tax Bill
To work out your provisional CGT liability, you’ll need to estimate your total taxable income for the year. This affects whether your gains are taxed at 18% or 28%.
You can reduce your taxable gain by:
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Using any losses brought forward
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Offsetting losses from the current year
Tip: If you’re planning to sell an asset at a loss, do it before you report a gain — it could reduce the amount you owe.
Final Step: Once You Submit, You Can’t Adjust It (Yet)
Once your provisional gain is submitted and the tax is paid, you won’t be able to revise it until your year-end self-assessment. That means accurate estimating is critical. Late submissions? Penalties will apply — so don’t risk it.
Don’t Let These Changes Catch You Out
Understanding these new capital gains tax rules is vital if you’re planning to sell property or other chargeable assets.
👉 Need help navigating the changes? Talk to our experts to make sure you stay compliant, avoid penalties, and optimise your tax position.