COVID-19: Capital Gains Tax (CGT) 30 day reporting changes

When UK resident individuals, trustees and personal representatives dispose of residential property it is important to be aware of the Capital Gains Tax (CGT) reporting changes now with us where the unconditional contract is signed after 6 April 2020, usually this is the date of exchange.

Generally a return in respect of such a disposal must be delivered to HMRC within 30 days following the completion of the disposal, and a payment of the CGT liability made at the same time.  Failure to meet the 30-day deadline may result in late filing penalties and interest charges.

This is a very short deadline to calculate the gain arising, and iron out any issues, to ensure the correct CGT liability is reported and paid on time.  There are also restrictions on losses you can set against a taxable gain at the point of reporting, and a reasonable estimate of taxable income for the year will also be necessary.  In certain circumstances a return can be amended at a later date, otherwise any repayment may have to wait until the tax return for the year is filed.

You will also need to create a “Capital Gains Tax on UK property account” before you can report and pay the tax using this service; we can use this account on your behalf once set up but this is an added step that must be factored into timings and is separate from the Self-Assessment system.

The 30-day deadline does not apply where a gain is not chargeable to CGT, such as where a gain is covered by private residence relief, a transfer to a spouse/civil partner or a loss is made.  This non reporting aspect only applies to UK residents, a non-resident must report all disposals of UK property even if there is no tax to pay or a loss is made.

It is important to take early advice on any such disposals to ensure all the relevant details can be obtained in good time and the relevant online accounts set up in advance, or maybe to establish no report is required.

Given the situation in the UK with regard to the outbreak of Coronavirus (COVID-19), the Government is urging parties involved in home moving to adapt and be flexible.  Generally this is likely to delay any completion until the stay-at-home measures are no longer in place.  Current Government advice on home moving can be found here https://www.gov.uk/guidance/government-advice-on-home-moving-during-the-coronavirus-covid-19-outbreak

Disclaimer - All information in this post was correct at time of writing.