CGT reporting deadline

Newsletter issue - August 2020.

Capital gains tax (CGT) on disposals of UK residential property between 6 April and 1 July 2020 had to be reported to HMRC by 31 July to avoid a penalty.

Finance Act 2019 made certain changes regarding payment of CGT, which took effect from April 2020 and broadly align the position of UK residents and non-UK residents. From 6 April 2020, a UK resident who sells a residential property in the UK will have 30 days to tell HMRC and pay any CGT owed. Failure to notify HMRC within 30 days of completing a sale may result in penalty and interest charges.

However, in response to the COVID-19 pandemic the government extended the reporting deadline so that no late filing penalty will be charged for any transactions completed between 6 April 2020 and 1 July 2020 which were reported by 31 July 2020.

The extended deadline applies only to UK resident taxpayers for whom the requirement is new - non-residents have to file within 30 days of completion.

The requirement to pay any CGT due within 30 days of completion was not deferred and interest will be charged on any tax not paid within 30 days of completion.

UK residents are required to report gains on UK residential property only where tax is due.

A CGT report and accompanying payment of tax may be required where the taxpayers sells or otherwise disposes of:

a property that they have not used as their main home;
a holiday home;
a property which has been let out for people to live in;
a property that has been inherited and not used as a main home.

There is no requirement to make a report make a payment of tax when:

a legally binding contract for the sale was made before 6 April 2020;
the individual satisfies the for Private Residence Relief (generally a main residence);
the sale was made to a spouse or civil partner;
the gains (including any other chargeable residential property gains in the same tax year) are within the tax free allowance known as the annual exempt amount (£12,300 in 2020/21);
the property is sold for a loss; or
the property is outside the UK.

HMRC have launched a new online service that allows taxpayers to report and pay any CGT owed. (https://www.tax.service.gov.uk/capital-gains-tax-uk-property/start/report-pay-capital-gains-tax-uk-property?_ga=2.237065728.1433627935.1588839395-504776228.1588839395)