30-day reporting of CGT on disposals of UK residential property

Published

11th August 2020

Reporting and payment of capital gains tax (CGT) on the sale or disposal of residential property is now live on HMRC’s website.

The CGT changes were previously reported in our blog on 25 September 2019. We have set out below the main points to note on 30-day reporting and the recent HMRC guidance on relaxation of the penalties for late submission in the first few months of implementation.

CGT reporting and payment for UK residents:
If you have CGT to pay on the sale or disposal (which can include a gift) of a UK residential property, from 6 April 2020 onwards, this needs to be reported and paid within 30 calendar days from the date of completion of the sale.

Reporting requires the completion of an online form via HMRC’s website.

Residential property can include dwellings such as, holiday homes, rental properties or a house you have inherited. Care would need to be taken if the property has only been occupied as your main residence for part of the period of ownership. In these circumstances, relief from CGT may not be available in full, especially given the changes introduced from 6 April 2020 for principal private residence and letting relief, which now sees the last 18 months exemption reduced to 9 months and lettings relief only available in very limited circumstances.

The CGT payment is mandatory, and it is not possible to elect to pay the CGT via self-assessment.

The rate of CGT payable is determined by the income in the tax year of disposal. For transactions at the start of the tax year it may be necessary to estimate the CGT payable.

When determining the level of gain, any brought forward capital losses and the CGT annual exemption can be considered.

For a mixed-use property, an apportionment of the gain would be required as only the residential element needs to be reported via the new online form.

If no CGT is due, then the online form is not required (this differs to the position for non-UK residents as noted below).

If you are already within self-assessment, the gain should also be returned on your self-assessment tax return in the usual way.

If you are not already within self-assessment and have no other reason to complete a self-assessment return, it is not necessary to register for self-assessment as well as submitting the online form.

Penalties and interest for failure to report and pay CGT:
HMRC is allowing an adjustment period for UK residents selling/disposing of properties to adapt to the change in rules. For transactions completed between 6 April and 30 June 2020, HMRC has confirmed that they will not issue late filing penalties where the new online form is received up to and including 31 July 2020.

For transactions completed from 1 July 2020 onwards, a late filing penalty will apply if the online form is not submitted within 30 days.

Interest will accrue if the CGT remains unpaid after 30 days of completion of the sale/disposal.

HMRC has referenced the current COVID-19 situation and realise where a property is gifted, there could be no cash changing hands on a transfer but CGT may be due. In these circumstances or if you are experiencing difficulties in paying the CGT by the deadline, you should contact HMRC’s time to pay team.

Does the reporting apply to overseas properties?
If the property is overseas, it is not mandatory to submit the online form or pay the UK CGT within 30 days of sale. However, for such disposals, or for non-residential UK disposals, HMRC offers a real time capital gains tax service, which allows individuals to pay the CGT on such disposals early if preferred. As above, if you are already required to submit a self-assessment tax return, the gain would also need to be reported on the tax return in the usual way.

What if I am non-UK resident?
The 30-day reporting and payment for non-UK residents selling UK residential property and UK non-residential property have been in place since 6 April 2015 and 6 April 2019 respectively. Given that the reporting system for non-UK residents has been around for some time, it is expected that the same relaxation of the penalty system for UK residents will not apply to non-UK residents.

Previously non-UK residents could defer to pay their CGT via self-assessment but this option was withdrawn from 6 April 2020 and they must now pay within 30 days.

Got a question?
If you would like to discuss any aspect of the above, please don't hesitate to contact Nicola Sargeant or a member of my team.

Johnston Carmichael (Scotland) Ltd

Scotland's largest independent firm of Chartered Accountants and Business Advisers

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