From 6th April 2020, any capital gains tax (CGT) due on the disposal of a UK residential property must be reported and paid within 30 days. Anyone selling UK residential property needs to be aware of these changes.
Previously, the disposal of any kind of property (residential or not) was reported on the annual self-assessment tax return. Now this is to be reported and paid within 30 days on a separate ‘residential property return’. The 30-day count starts from the date of completion.
These changes apply to UK residential property transactions where:
- The date of disposal is on or after 6 April 2020 and
- CGT is due. UK residents will not need to report transactions where no CGT is due because of the availability of reliefs such as private residence relief, annual exempt amount etc. Non-UK residents still need to report transactions even where there is no tax due.
Given that there is a 30-day deadline to report and pay CGT, it may be that the necessary information to compute the gain is not yet available in full. In this case, the legislation allows for the use of the best available estimates. The CGT return may then be amended within 12 months, if required.
As the CGT return is separate from the standard self-assessment tax return, the same transaction may have to be reported twice, once on the CGT return and once on the self-assessment return. Tax paid under the new rules will be treated as a payment on account against the final self-assessment liability.
The CGT return will need to be completed online using HMRC’s new, dedicated service. Agents (like ourselves) will also be able to submit the returns on behalf of clients.
Of course, as is to be expected, there are penalties for late filing. However, HMRC have stated that there will be a grace period relieving any late filing penalties for returns of disposals occurring in the period 6 April to 30 June.
If you have any questions or would like to talk to someone about these changes, please don’t hesitate to get in touch.