In addition to the income generated from rent, landlords can profit from a rental property if they sell it. Currently, they have to declare any profit - the capital gains - within their next self assessment, with any CGT due being included in that year’s tax bill.
Under the new rules, CGT due on any property sold from April 6 2020 must be paid within 30 days - up to 20 months less than at present. Landlords will have to complete a ‘residential property return’ within the new 30-day window, with CGT payable on account.
The changes to capital gains tax will also affect some landlords who once lived in the property they later rented out, should they choose to sell. If the house was genuinely their main home at some point, the private residence relief applies to the time it was the main residence, plus the last 18 months of ownership - even if they didn’t live in it during that time. This extends to 36 months for people with a disability and those who move into a care home.
In the Autumn Budget 2018, however, the then chancellor Philip Hammond announced that this 18-month period could be shortened to nine months from April 2020, making landlords in this category liable for CGT over a longer period.