For disposals of UK residential property completed on and after 27 October 2021 UK tax residents must report the gain to HMRC and pay the Capital Gain Tax (CGT) due, within 60 days of completion.
The filing and payment window was increased from 30 days to 60 days in last autumn’s budget. This extension provides much needed additional time for taxpayers and tax advisers alike, especially where complex disposals are involved.
This new time period only applies to residential properties, not commercial ones. Additionally, this new regime is not applicable to properties owned by companies.
The extension is especially helpful for non-resident taxpayers as reporting CGT on a UK property requires a government gateway log in. The log in can take more than 30 days (the previous reporting and payment window) to arrive. With the extended window, all taxpayers should have the time needed to set up and report disposals, and pay CGT as required.
The 60-day window applies to the following types of property:
- A property never lived in, or only lived in for part of the ownership period where not a main residence.
- A holiday home.
- A rental property.
- A mixed residential and commercial property.
It does not apply to capital gains arising on commercial properties or overseas properties.
Where the return is not filed within 60 days of the completion date an automatic late filing penalty of £100 will apply. Fixed £300 penalties or 5% of any tax due if greater will be charged if the return is more than 6 months and 12 months late.
The actual capital gains tax liability will be computed once the taxpayer’s Tax Return has been prepared. This will consider an individual’s taxable income for the year and losses realised after the property disposal that were not reflected in the original tax estimate. The CGT paid is treated as a payment on account, and interest will be charged where the estimated tax payment is less than the actual CGT due.
If no CGT is payable, then there is no requirement to report the gain and pay the CGT within 60 days of completion. However, non-UK residents must declare disposals regardless of whether a chargeable gain arises or not.
This notification and payment extension mostly affects:
- UK individual landlords selling UK buy-to-let houses and flats,
- disposals of second homes, and
- residential property capital gains not fully covered by principal private residence relief.
Are you selling an additional residential property in the UK?
The 60-day window starts from the completion date of your property sale. Now is the perfect time to:
1. Register for a government gateway account
2. Collate the necessary details such as confirmation of the purchase price, incidental costs (buying and selling) plus improvement costs.
3. Talk to the experts at re:accounts!
“We’re here to help you through the CGT reporting and payment process,” says Emily Bridges of re:accounts in Stevenage. “Many of our clients are based overseas so we understand the additional requirements involved. We can help you through the process – including any impact on your self assessment tax return – ensuring that any CGT owed is reported and paid within the timeframe required.”
There’s a lot to think about however we love a natter, especially with a cuppa!
