Property CGT: 30 Day Report and Pay

As previously reported a new requirement to report and pay capital gains tax (CGT) within 30 days on disposals of residential property was introduced in April.  With the COVID-19 crisis HMRC further announced a light touch approach to penalties by confirming they would not charge late filing penalties up to 31 July 2020.

This light touch is now ending, and transactions that are completed from 1 July will face the penalties if not reported in time. 

With the property market starting to take off again it is worth reviewing the steps that need to be taken.

Individuals and trustees who are UK resident for tax purposes and dispose of residential properties must report disposals unless there is no tax to pay (which may be because of private residence relief, or losses available to use).  Non-residents must report all property disposals (including non-residential) whether there is tax to pay or not.  You are required to complete the return even if you are already required to complete a tax return for the relevant year.  

The report is made online through the HMRC website.  You must have a Government Gateway ID, and through this you create a "Capital Gains Tax on UK Property Account" for each property disposed of.  The return must include a reasonable estimate of the CGT due on the property, as it is not always possible to calculate exactly as other disposals later in the same tax year could have an impact.  The final liability can then be calculated when completing the Self-Assessment tax return for the year, where any tax paid will be taken into account.  

If you have an agent and you want them to report the gain for you this is possible, however the taxpayer must still create the Capital Gains Tax on UK Property Account for the specific property before the agent can file the calculation on your behalf.  

The penalties if you miss the deadline are:

• Day after the filing date - £100
• Over 3 months late - Daily penalties of £10 (up to 90 days worth)
  
• 6 months late - £300 fixed penalty or 5% of the tax due, whichever is greater
• More than 12 months late - a further £300 fixed penalty or 5% of the tax due, whichever is greater

Interest is charged on the estimated tax that is paid after the 30 day deadline.  

These penalties can quickly mount up and will be an unpleasant surprise for anyone not aware of the new filing regime.  If you need help completing a Property CGT return please contact us.  

Internet Link: Report and Pay Capital Gains Tax on UK Property (H. M. Government)