INSIGHT 2020 - Page 41



There are various levels of fines in place for landlords that do
not fulfil these legal obligations; fines go up to a maximum
of £5,000.
Gains Tax means that from now onwards, landlords will only
receive lettings relief if they are living in the property at the
time of completion and sharing that property with a tenant.
Capital Gains Tax – April 2020
Client Money Protection – April 2021 (was April 2020)
In April 2020, changes to Capital Gains tax were introduced;
affecting the sale of additional properties in the UK. Currently,
Capital Gains Tax is set at 18% for basic rate taxpayers and
28% for higher rate taxpayers; changes to the law do not
affect rates, however, this does not mean that rates won’t
change in the future.
Mandatory client money protection rules were introduced
in April 2019 and agents were given a year to comply. The
rules meant that property agents had to be a member of an
approved client money protection scheme. In April 2020, the
grace period was supposed to be coming to an end, however,
this has been extended by another year as agents have come
across difficulties opening multiple client accounts with
banks and building societies.
The changes to Capital Gains tax will affect the time you
have to pay your bill, the amount of tax relief you can claim
and the way in which letting relief will work.
Payment Deadlines
Capital Gains Tax is currently paid through your selfassessment tax return; it doesn’t normally need to be paid
until the following tax year. For example, a property sold
in 18/19 that incurs Capital Gains Tax does not need to be
declared and paid until 19/20. The new rules mean that from
April 2020, sellers will need to pay their full Capital Gains Tax
within 30 days of completion.
Private Residence Relief
Currently, Private Resident Relief means that if you sell your
home, you don’t have to pay Capital Gains Tax on the profits.
This does apply to some landlords as well; for example, if they
live in the property but they are now selling. A landlord is
currently exempt from paying Capital Gains Tax on properties
they lived in for the last 18 months of ownership, regardless
of whether it has been let out, meaning that you have longer
to sell the property after you move out. In April 2020, this
time frame will be shortened to nine months.
Letting Relief
Alongside Private Resident Relief, landlords are also currently
able to claim lettings relief on properties that they used to
live in, up to the value of £40,000. The changes to Capital
Isobel Thomson, chief executive of Safeagent (a letting agent
accreditation scheme for lettings and management agents)
blamed banks for the delay, she said: “Unfortunately, we
know some banks are refusing to permit agents to open
client accounts or changing the terms on which existing
accounts are held with little notice. Client accounts are vital
for compliance with Client Money Protection Regulations.
“Not only does this stance make life difficult for these agents
who are trying to comply with the legislation, but these banks
are actively blocking, rather than supporting an important
consumer protection measure. This is unacceptable.”
Extension of the Tenant Fees Act – June 2020
The Tenant Fees Act came into force in June 2019, meaning
that all new tenants could not be charged any fees other than
rent, deposits, holding deposits and charges for defaulting
on the contract. This June, the rules will be extended to all
existing tenancies. If a tenant is charged for any ‘extras’ such
as cleaning, gardening and other administration, a landlord
can be fined up to £5,000 for a first offence, and £30,000 for
subsequent breaches.
For further information, please contact Teresa Sargeant by
emailing teresa.sargeant@youngsrps.com.
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