Since HMRC’s introduction of the new 30 day reporting legislation for Capital Gains Tax (CGT) (click here to see previous update), all reports must now be made through their online filing system. This has resulted in many users experiencing issues. We’ve put together an update with answers to the most frequently asked questions.
If you realise an error was made after submitting your property disposal return, an amendment can be made using the software originally used to submit the return, or alternatively through your self- assessment tax return.
If you’ve already filed your self-assessment return, any changes will require an amended self-assessment tax return to be filed.
HMRC have confirmed that the use of estimates is acceptable when completing your CGT returns.
Estimates can be corrected by amending the property disposal return, or alternatively through the end of year self-assessment tax return.
Specifically, the returns require an estimate of your income for the year to determine what rate of CGT is payable. This can be difficult for certain taxpayers, particularly early on in the tax year.
HMRC have confirmed that, provided a reasonable estimate was used at the time and the estimates box is ticked on the return, any additional tax due that is attributable to the estimate will not attract late payment interest from the original 30 day payment deadline. Interest will, however, run as usual from 31 January following the tax year of disposal, on any unpaid CGT at that point.
If the estimates were unreasonable, or the original return did not have the estimate box ticked, late payment interest (currently at 2.6%) will start to accrue from the original 30 day deadline.
Repayments are not easily dealt with on the self-assessment tax return and must be applied for separately.
If the overpaid tax is the result of an amendment or due to a further UK property disposal return, there is a section to request a repayment if one is due. This will then prompt HMRC to review the record and repay any overpaid tax.
If the original payment was made by card, then this will be how the refund is repaid. HMRC are currently reviewing the UK property disposal online service to add the option of notifying HMRC of bank details for repayment cases.
If a repayment is not requested, then any tax overpaid will remain as a credit on your UK property disposal account until HMRC are contacted.
HMRC have recently announced that they are looking into ways to reclaim any extra tax paid using the self-assessment tax return. Taxpayers will be able to use the overpayment as a credit against the tax due on self-assessment. However, this will require a phone call to HMRC to manually process the request, which may take far longer than using the online property disposal system.
Some individuals may not be able to use the online system and in such cases paper returns (Form PPDCGT) are accepted by HMRC.
After the paper return is then processed by HMRC, a manual tax charge is raised by HMRC and a letter is sent to both the taxpayer and the agent, advising them how to pay and the reference number to use. The taxpayer will then have 14 days from the date the charge is raised to pay any CGT owing.
If you’d like assistance with filing your CGT returns or with navigating these issues, please get in touch with our Tax Director David Portman (davidportman@lubbockfine.co.uk) or your usual Lubbock Fine contact.