Changes to Capital Gains Tax – now in force

Published by Jo White on 13 May 2020

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For all UK residential property transactions completing on or after 6 April 2020 you are now required to file an online Return to report capital gains arising on their disposal.  The deadline for this is within 30 days of the transaction completing, and you are also required to make a payment-on-account of the Capital Gains Tax due by the same deadline.

However, not all disposals need to be reported. HMRC have confirmed that you do not need to file a Return where, for example:

  • you meet the criteria for full Private Residence Relief,
  • the gains (including any other chargeable residential property gains in the same tax year) are within your Annual Exemption (currently £12,300),
  • you sold the property for a loss.

To file a Return you’ll need a Government Gateway user ID and password, and to create a Capital Gains Tax on UK property account. If preferred, you can then share your account number with us so we can take the relevant steps to submit the Return on your behalf as your tax agent.

HMRC confirmed that, due to the COVID-19 pandemic, they will not issue a late filing penalty for any transactions completed on or after 6 April 2020 up to 1 July 2020, provided that a Return is filed by 31 July 2020. Transactions completed from 1 July 2020 will receive a late filing penalty if they are not reported within the 30 day deadline. However, late payment interest will be charged if the tax remains unpaid after 30 days for all transactions from 6 April 2020.

It is worth noting that non-UK tax residents will need to use their online account to report disposals of UK residential and commercial property within 30 days of the completion date, even if they have no tax to pay or have made a loss. All non-resident Capital Gains Tax Returns will need to be submitted using the new online service with two exceptions – 1) disposals relating to mixed-use property and 2) certain “indirect” disposals of UK property – where specific Returns available on the gov.uk website will need to be completed with the 30 day time limit.

You cannot use the online service to report UK property disposals for someone who has died. HMRC will need to be contacted in this scenario.

Unfortunately this is another administrative burden for tax payers to consider. It is important to take the correct advice in a timely manner to ensure that you do not end up being liable to penalties and interest charges for non-compliance.

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