The new system for the reporting and payment of Capital Gains Tax (CGT) on UK residential property disposals is now live.
Read our full guide to the changes here: Get ready for changes to Capital Gains Tax affecting UK residential property sales
What types of transactions are reportable under the new system?
As a reminder, you are liable to the new 30-day reporting timeframe if you (an individual) make capital gains on residential properties, on or after 6 April 2020. This is likely to affect
- A property not used as a main home
- A holiday home
- A property which is let out
- A property that has been inherited and not used as a main home
However, the following transactions are not reportable using the new system:
- Sale of a main residence where the gain is wholly covered by principal private residence relief (PPR)
- Where a legally binding contract for the sale was made before 6 April 2020
- If the disposal was made to a spouse or civil partner (nil gain, nil loss treatment)
- When the gains (including any other chargeable residential property gains in the same tax year) are within your tax free allowance (Annual Exempt Amount)
- If, after deducting all allowable costs, you made a loss on the disposal
- If the property is situated outside the UK
- Property developments where profits are charged to income tax
Implications for non-UK residents
If you are a non-UK resident, you must continue to report sales or disposals of interests in UK property or land, regardless of whether there is a gain or not. You must do this within 30 days.
From 6 April 2020, you can no longer defer payment via your Self Assessment return. You must also pay the CGT within 30 days.
Do you still need to register for Self Assessment?
The new system means that you no longer need to register for Self Assessment solely for the purpose of reporting a residential property disposal. If you are reporting a ‘one-off’ disposal and have no other reason to complete a tax return, you will not need to register for Self Assessment.
How to use the new system to report and pay CGT
If you already have a Government Gateway account, you will simply need to add the “Capital Gains Tax on UK property account” service to your Gateway. You can then submit an agent authorisation request, which will allow your accountants to file the return on your behalf. Click here to get started.
If you do not have a Government Gateway account, you will need to create one first in order to access the system. We can assist with this process for our clients.
Due to COVID-19, HMRC did not issue late penalties for any transactions completed between 6 April and 30 June 2020, provided the gain was reported and any tax due paid by 31 July 2020.
Anyone who completes the sale of a property from 1 July 2020 onwards has 30 days to report and pay the tax due.
Transactions completed from 1 July 2020 will receive a late filing penalty if they are not reported within 30 days.
Interest will be charged if the tax remains unpaid after 30 days for all transactions from 6 April 2020.
How can we help?
For further advice, or assistance with the new reporting requirements, feel free to get in touch with David Portman at firstname.lastname@example.org or Phil Moss at email@example.com.