In this digital age, HMRC has placed an emphasis on tax being reported and paid using their various platforms, the latest of which is the new reporting requirements for capital gains realised by UK resident individuals on UK residential property.
From 6 April 2020, UK resident individuals, including Personal Representatives (‘PRs’), must report disposals of UK residential property, and pay the tax due on that disposal, within 60 days (from 27 October 2021) of date of disposal. The date of disposal for this purpose is the completion date as opposed to the date of exchange of unconditional contracts (although the date of exchange of unconditional contracts is still the date of sale for CGT).
It is important to highlight that a report and pay CGT return is required even if any of the following apply:
- a gain does not arise on disposal;
- a capital loss is suffered;
- you have registered for self assessment; or
- you have no tax to pay
The return can be amended once submitted (within 12 months of submission), but it can only be amended for events that had occurred at the date the return was originally delivered.
Submitting the CGT return, does not affect the need to submit a Self Assessment return in the normal way (ie, by 31 January following the end of the tax year), the disposal will also need to be included on the self assessment return with final CGT calculation.
Payment of the tax
In addition to submitting the CGT return within 60 days, the tax due on the disposal of the residential property must also be paid (ignoring any other CGT disposals) within 60 days. This tax is referred to as notionally due, and treated as a payment on account of the final CGT liability for the year.
If there are Capital Losses available when the residential property is disposed if/ before the return is submitted they can be set against the gain arising when calculating the tax liability.
Submission of the CGT return
This new 60 day “Report and pay Capital Gains Tax [‘CGT’]” requirement brings about additional digital challenges for yourselves and your clients. Agents can, and should where possible, prepare and submit the report and pay the CGT return on behalf of individuals and personal representatives. However, before the agent can do this, the individual/ PR must create a report and pay CGT account.
Further information and instructions on how to create the report and pay CGT account can be found here.
Finally, ‘digitally excluded’ clients can call the HMRC Extra Support Helpline for help in creating a report and pay CGT account. It is our understanding that the helpline will assist such clients to register for an account and will provide them with a UK Property Account reference which they can share with their Agent.
We would be happy to discuss the above with you and provide assistance if required. Please contact Angela Keery, Head of Tax on 028 9032 3466 or by email firstname.lastname@example.org