CGT is on the rise

In the 2020/21 tax year, record amounts of CGT was recorded, with the total CGT liability increasing by 42% from the previous year. This does not come as much of a surprise, as 2020/21 was the first year the ‘CGT on UK property service’ was introduced.

However, HMRC have recently reported that, in the 2021/22 tax year:

• The ‘CGT on UK property service’ was used by 129,000 taxpayers – an increase of 52%.

• 137,000 returns were filed – an increase of 45%.

• Just over £1.7 billion tax liability accrued on residential property disposals – an increase of nearly 50%.

It may seem obvious that this reflects the increased activity within the property market following the COVID-19 pandemic, proven by an increase in the number of transactions between the first two tax years.

A CGT return is not required if you are UK resident and no tax liability arises as a result of the disposal. However, non-UK residents are required to report ALL UK property disposals (both residential and commercial), regardless of whether a liability arises. This report must be filed, and the tax paid to HMRC, within just 60 days of completion – not a great deal of time and certainly a lot sooner than the previous Self Assessment deadline!

According to HMRC’s figures, approximately 20% of taxpayers who had gains to declare from UK residential property, failed to report and pay the CGT due on time in 2021/22. Whitings are here to help.

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