Property Sales and CGT – Don’t get caught out

First published on 10 August 2020 by Alastair
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New rules, introduced from 6th April 2020, mean that UK residents need to report and pay their capital gains tax liabilities on property sales within 30 days of the sale. Previously, this did not need to be reported until you completed your tax return for the year, but this change brings the treatment more in line with the reporting requirements for non-UK residents that were brought in a few years ago.

Who needs to report?

Any individual that sells a UK residential property will need to report their sale under the new regime, unless they meet one of the two following conditions:

  • The date of exchange was before 6 April 2020
  • There is no capital gains tax due - this will most commonly be the case where you are disposing of a property which has been your main residence throughout the entire period of ownership. Alternatively, there may be no capital gains tax to pay because the chargeable gain does not exceed the annual exemption (£12,300 for 2020-21), or there is a capital loss.

Even if you already submit a self-assessment tax return you are required to make a ’30 day report’.  The only exception is in circumstances where the tax return is submitted before the end of the 30 day deadline, which is only likely to apply where a sale is made at the end of tax year, or there is a significant delay between the exchange of contracts and the completion which means the sale takes place over two tax years.

If you have reported your sale under this regime, and have no other reason to submit a self-assessment tax return, there is no longer a requirement to submit a return to report the sale.

When is the reporting and payment deadline?

The deadline for the report is 30 days after the date of completion (not the date of exchange).  If this deadline is not met, there is an initial late filing penalty of £100 and further penalties apply if it goes unsubmitted.

Capital gains tax is due on the sale is due on the same date.

How do I make a report?

The ’30 day report’ is made online.  To do this, you must have a ‘Capital Gains Tax on UK Property’ account setup with HMRC.  This can be done here.

If you unable to make an online submission, we recommended you contact HMRC as soon as possible to discuss this as although in certain circumstances they can issue a paper return, the 30 day deadline remains in place.

If you would like our assistance in calculating and reporting your gain, please get in touch and we will be happy to assist.

Christopher Leslie, Tax Senior

 

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