Since 6th April 2020 HMRC have made significant changes to how capital gains on the disposal of property are reported and when applicable tax is due to be paid.
You now have 60 days to file a return with HMRC AND pay any tax due on the disposal (for completion dates after 27th October 2021). Prior to this you only had 30 days.
Does this apply to me?
If you have tax to pay on this disposal then Yes. In the following situations preparing a computation showing that there is no tax due should be suffice.
- The gain is covered by reliefs such as main residence relief.
- Residential Property sale has resulted in a loss.
- Losses brought forward available to cover this gain in full.
- Your annual exemption (£12,300 for 2021/22) covers this gain (and any earlier gains made in the same tax year).
What do I need to do?
You will need to set up a government gateway account and a capital gains tax account online. The taxpayer must do this, however, please feel free to reach out to us and we can assist with videos of the steps to follow.
Once your online accounts have been set up your accountant can prepare the computation and complete the return on your behalf. HMRC will ask you to authorise them to act for you.
It is essential to contact your accountant as soon as possible. You will need details from the purchase of the property and any costs of improvements made, even possibly valuations, and with the tight turnaround time of 60 days we would advise to have this information together even before the completion date.
Late reporting and payment of tax will result in penalties and interest.
Things to note.
- A separate return will be required for each disposal (unless you have more than one completing on the same day).
- The disposal still needs to be reported on the annual Self – Assessment Tax Return.
- This information is based on the sale of UK residential property.
- This information is for UK residents – different rules will apply for non-residents.
- It is not just the sale of a property that can trigger a capital gain but transfers by way of a gift or a transfer at undervalue.
- The tax due could change once your full income for the tax year is known– as this return is being prepared during the tax year the tax rate used is really an estimate.
If you are thinking of selling a property, or you are further along the journey and would like to discuss in more detail please feel free to reach out to us.