Important changes to the deadlines for filing and paying CGT on the disposal of UK property
Few property transactions are proceeding at the moment but anyone selling UK residential property needs to be aware that CGT due should now be reported and paid within 30 days of completion. The new obligation applies to UK residential property transactions where:
- The date of disposal (normally the date of exchange of contracts) is on or after 6 April 2020 and
- CGT is due. UK residents are not required to report transactions where no tax is due, for example if the residential property has been used solely as the owner’s private residence during the time it was owned.
UK residents disposing of UK residential property
The changes for UK residents only apply to disposals of UK residential property.
From 6 April 2020, a UK resident disposing of a residential property in the UK and making a gain which is liable to CGT will have 30 calendar days from the date of completion to tell HMRC and pay any CGT owed. They will be able to do this using a new online service – see below.
This does not apply if the residential property is the person’s home and it has been used solely as their private residence during the time it was owned. This is because the disposal will be covered by Private Residence Relief.
Non-UK residents disposing of UK property
Non-UK residents must continue to report sales or disposals of interests in UK property or land regardless of whether there is a CGT liability, within 30 days of completion of the disposal.
Non-residents reporting indirect or mixed-use disposals must use the old reporting system at: https://www.tax.service.gov.uk/shortforms/form/NRCGT_Return?_ga=2.192888618.1414080478.1592918558-825551431.1585555644
Note that paper returns are still required for individuals, agents and personal representatives who are reporting property sold for someone who has died.
From 6 April 2020, there is no longer an option to defer payment of CGT via a Self Assessment return, and any tax owed must be paid within the 30-day reporting and payment period.
Reporting the gain
From 6 April 2020 HMRC have introduced a new Beta online service on GOV.UK so that taxpayers can notify and pay the CGT due on the gain.
Agents who need to report and pay tax under this new system on behalf of a client cannot use their existing 64-8 authorisations. If they do not already have one, they need to set up an agent services account and then log in to that account and select ‘ask a client to authorise you’. This then involves entering the client’s details that then creates a digital link to share with the client, asking them to authorise the agent.
What you’ll need to complete the return
You need these details about your client’s disposal:
- address and postcode
- date they got the property
- date they exchanged contracts when selling or disposing of the property
- date they stopped being the property’s owner (completion date)
- value of property when they got it
- value of property when they disposed of it
- costs of buying, selling or making improvements to the property
- details of any tax reliefs, allowances or exemptions they are entitled to claim
- property type if they’re a non-resident
- property value on 31 March 1982 (known as ‘rebasing’) if they were a UK resident at the time of the disposal and owned the property on or before 31 March 1982
- property value on 5 April 2019 (known as ‘rebasing’)if they were a non-resident at the time of the disposal and owned the property on or before 5 April 2019
You may be asked to upload a document showing how the Capital Gains Tax due was worked out.
Failing to report and pay tax within 30 days
Initially, HMRC has stated that they will not issue late filing penalties for returns received late up to and including 31 July 2020. This means that transactions completed from 1 July 2020 onwards will receive a late filing penalty and interest will accrue if the tax remains unpaid after 30 days.
HMRC have stated that where a chargeable UK residential property has been sold for cash, the taxpayer will have received money from the sale and so should be able to pay the tax due.
However, the Government acknowledges that this will not always be the case. Where property has been gifted, tax may be payable but no cash will have changed hands.
Equally, as a result of the Covid-19 crisis, the taxpayer may have been forced to sell property to generate funds for their business. HMRC has stated that they will be adopting a flexible approach to dealing with requests for time to pay arrangements, taking specific circumstances into account, on a case-by-case basis.
Year end Self-Assessment Return – to file or not?
Where a taxpayer has no reason to file a Self-Assessment tax return, other than reporting a property disposal that falls within the new 30-day regime, they will not need to register for Self-Assessment.
However, where a taxpayer is required to file a Self-Assessment return for other reasons, they must continue to do so and report all income and gains for the tax year, including any gains that have already been reported, and tax paid, within the 30 days of completion.