From 6 April 2020 onwards UK residents disposing of UK residential property were required to report the disposal to HMRC on a capital gains tax (CGT) return and pay any tax due within 30 days of selling the property however this has now changed to 60 days, writes David Morrison of EQ Property Taxperts.
In the Autumn Budget 2021, an extension of the time limit for making Capital Gains Tax (CGT) returns and associated payments was announced. Previously UK residents were required to report any gains on residential property and pay the CGT due within 30 days of completion, this has now been extended to 60 days. This change came into effect immediately, meaning any disposals that were completed on or after 27 October 2021 will have an extended deadline of 60 days. The 60-day extension also applies to any direct or indirect disposals of land by non-UK residents.
The Chancellor also confirmed that the CGT annual exemption would remain at £12,300 until the end of 2025/26. There were no other changes announced which affect CGT rates allowances or exemptions.
By way of a reminder, there are some exemptions to the requirement to file a return these include the following situations:
- The whole gain is covered by Principal Private Residence relief
- The property was sold at a loss
- The property is situated outside the UK
- The disposal is to a spouse/civil partner
For non-UK resident individuals, the disposal of all UK property has to be reported to HMRC within 60 days whether or not there is tax to pay or a loss has been made.
Failure to report and pay any tax due by the 60-day deadline will result in interest and penalties being charged, estimates can be used but any underpaid tax will attract interest and potentially penalties.
The information required to calculate the gain and complete the return is as follows:
- property address and postcode
- date the property was acquired
- value of the property when acquired
- any costs of buying, selling or capital improvements to the property
- date contracts were exchanged when selling or disposing of the property
- completion date of sale
- value of property when disposed of
- details of any tax reliefs, allowances or exemptions the individual is entitled to
- property type, if non-resident
- property value on 31 March 1982 (known as ‘rebasing’) if UK resident at the time of the disposal and owned the property on or before 31 March 1982
- property value on 5 April 2019 (known as ‘rebasing’) if non-resident at the time of the disposal and owned the property on or before 5 April 2019.
To report the gain a Government Gateway registration is required. The individual will need their Government Gateway user ID and password or they will need to create a user ID if they haven’t previously set one up. They will then need to create a ‘Capital Gains Tax on UK property’ account before they can report and pay the tax due.
For support with your disposal or any other property matter, you can get in touch with the EQ Property Tax team on 01382 312100 or email email@example.com.