Until recently, tax payers had between 10 and 20 months from the date they disposed of a UK residential property to report and pay any Capital Gains Tax (CGT) due. This changed from 6 April 2020.
Now any CGT due from the disposal of a UK residential property that is not someone's principal private residence, must be reported to HMRC and paid within 30 calendar days of completing the property sale or transfer.
This means people need to have both the information and funds to settle the CGT liability available at a much earlier stage.
UK residents disposing of UK residential property
A UK resident disposing of an interest in UK residential property that is not their main residence, such as a buy-to-let property or holiday home, will have to report and pay any CGT arising from the disposal within 30 days of completion of the sale or transfer. This includes reporting any CGT liability that occurs as a result of gifting a property.
This requirement doesn't apply if the property has been used solely as a person's residence, if there has been a capital loss, if the gain is covered by your annual exemption or if a gift of property is made between spouses or civil partners.
Non-UK residents disposing of UK property
Non-UK residents must continue to report sales or disposals of interests in UK residential or commercial property or land, regardless of whether there is a CGT liability, within 30 days of completion of the disposal.
There will no longer be the option to defer payment of CGT via a Self-Assessment return and any tax owed must be paid within 30 days.
Trusts disposing of UK property
If a trustee sells or disposes of a UK residential property held in a UK trust then any CGT liability must be reported and paid within 30 days of the completion of the disposal.
If you are a trustee who sells or disposes of an interest in a UK residential or commercial property or land held in a non-UK resident trust, then this must be reported to HMRC within 30 days of completion irrespective of whether there is a CGT liability.
What if you miss the deadline?
HMRC have confirmed that they will not issue late filing penalties for CGT returns and payments made in relation to the disposal of a UK residential property by a UK resident up to and including 31 July 2020.
Any transactions completed from 1 July 2020 onwards will receive a late filing penalty if they are not reported within 30 calendar days. Interest will also accrue if the tax remains unpaid after 30 days.
Next steps
It is important that your professional advisors work together to ensure that each party has the necessary information they need to report and pay any CGT liability on your behalf by the 30 day deadline.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
