There have been some significant changes to how capital gains tax (CGT) is reported and paid. This is following new rules that came into effect on 6 April 2020. Now, within 30 days of completion, yes, you read that correctly – within 30 days of completion, UK residents must:

  • Calculate the gain made on the property (using estimates if necessary). The rates are 18% for gains within the basic rate tax band or 28% within the higher rate tax band.
  • Report the gain to HM Revenue and Customs by submitting a residential property return
  • Make a payment of CGT to HMRC

All within 30 days of completion!!

Changes to CGT

These new rules affect individuals, but also Trustees who hold and dispose of residential property. This change will predominantly relate to the sale of rental properties. In most cases, you won’t need to pay CGT when selling the property you live in, because you will be entitled to ‘private residence relief’.

The new system requires sellers to complete an online form where they make a taxable gain. However,  this information will still need to be included on the following year’s self-assessment return for reference.

Failure to file a CGT return within 30 days will lead to an automatic late filing penalty of £100. However, where a return is still outstanding at six and 12 months, penalties of £300 or five per cent of the tax due, if greater, will also be charged.

A penalty equal to five per cent of the tax outstanding will be charged if the liability is not settled within 30 days of 31 January, following the end of the tax year of disposal. This could be followed by further charges.

As ever, each situation is different. So, if you have any questions or concerns about how the changes might effect you please give us a call or drop us an e-mail.