TT356: CGT reporting and payment deadline extended
It was only as far back as 2020 when the Government introduced new reporting requirements for UK residents disposing of residential property. Taxpayers were asked to report the disposal of UK residential property within 30 days where a capital gains tax (CGT) charge arose, with payment of the estimated tax liability also due within 30 days. This represented then a significant change to the normal reporting and payment deadlines for taxpayers.
However largely due to ongoing taxpayer confusion about reporting and payment deadlines and the difficulties faced in registering online, the reporting and CGT payment deadline has been extended from 30 days after completion to 60 days for disposals of UK residential property completed on or after 27 October 2021. The previous 30-day time limit had proved to be quite a challenge for taxpayers!
One of the biggest ongoing issues is that taxpayers are simply not aware of the reporting and CGT payment requirement when they make a property disposal.
- It may be that solicitors and estate agents are failing to mention the requirements as part of the deal process.
- Accountants are often not informed until the tax return submission comes round. This could be up to 22 months after the property completion date.
There is also a problem for self-assessment taxpayers who find they have overpaid CGT via their property account. In theory, the refund should be included within the self-assessment calculation, but this is not happening. It might be possible to obtain a CGT refund by amending the original property return, but otherwise it means having to phone HMRC.
How to report to HMRC
You should create a Capital Gains Tax on UK property account under a Government Gateway user ID. HMRC are expecting taxpayers to use the digital service by default, however if you are uncomfortable or unable to complete the digital return, you should contact HMRC and explain your circumstances. If appropriate, they may assist you in completing the form over the phone or otherwise they will send you a paper version.
The 60-day deadline to file the return will still apply, so you should act quickly to avoid penalties. You do not have to wait until you have sold the property before contacting HMRC
It is worth noting that if your total capital gain does not exceed the annual exemption (currently £12,300 for individuals and estates, £6,150 for Trusts), and should the total proceeds on capital disposals not exceed by four times the annual CGT exemption, then the gain is not reportable to HMRC. There are also a number of exemption to filing a report including where the sale is of a property that is wholly covered by principal private residence relief.
For UK residents, the government has also clarified that where a gain is made on the disposal of a mixed-use property, the 60-day time limit only applies to the residential element.
The new deadline also applies to non-UK residents who have to report and pay CGT on the disposal of any type of UK property, whether it is residential or commercial.
Non-UK residents have faced particular problems because a Government Gateway login is required in order to set up a CGT on UK property account. Activation codes are sent by post, so they are often received outside the 30-day time limit. The alternative means having to complete a paper reporting form. The extra 30 days to report and pay should help but setting up a Government Gateway could still be problematic for those living overseas.
If you believe you are affected, please get in touch with us as soon as possible so we can help you process your requirements. It is worth noting that you may have to pay interest and a penalty if you do not report and pay on time, so we would welcome a conversation together to help you where possible.Talk to Barnes Roffe today