CGT return on the sale of a property has been a mandatory requirement since 6 April 2020 for UK residents that dispose of an interest in UK residential property that results in CGT to pay to HMRC.
If you sold a property in the UK on or after 6 April 2020
You must fill in a CGT return on the sale of a property and pay any tax due on UK residential property using a Capital Gains Tax on UK property account. You must do this within:
- – 60 days of selling the property if the completion date was on or after 27 October 2021
- – 30 days of selling the property if the completion date was between 6 April 2020 and 26 October 2021
From 6 April 2020, an individual (not a company) but also trustees and personal representatives, who sell a house or flat and make a capital gain on which capital gains tax (CGT) is payable (ie, not fully covered by principal private residence relief (PRR)), must fill in a CGT return on the sale of a property and pay the CGT due within 30 calendar days of the completion of the sale of the property. This was the so-called ‘30-day CGT pay and file regime’.
We covered the CGT implications & the requirement to prepare CGT return on the sale of a property from April 2020 onwards in a separate article here too.
However, in the Autumn 2021 Budget, changes were made. The government extended the time limit for reporting the gain and paying the CGT from 30 days to 60 days. This revised measure has an effect on disposals that were completed on or after 27 October 2021.
These new measures only apply to residential property, not commercial. Additionally, this new regime is not applicable to companies. However, if a company holds a residential property, it might have to pay the annual tax on enveloped dwellings (ATED), which is very expensive.
An individual only has to pay the CGT and fill in a CGT return on the sale of a property within 60 days of completion if CGT is actually payable on the gain. If no CGT is payable, then there is no requirement to report the gain and pay the CGT within 60 days of completion.
However, non-UK residents must declare such disposals from 6 April 2020, under the new regime, regardless of whether a chargeable gain arises or not.
The individual has to open up a new capital gains tax on a UK property account to prepare a CGT return on the sale of a property.
The new regime also applies to the disposals of second homes and relevant residential property capital gains not fully covered by PRR.
CGT return on the sale of a property – What are the key points?
• An online ‘capital gains tax on UK property’ return must be made during the tax year for each appropriate disposal.
• The new CGT reporting regime is in addition to declaring the gain on the normal self-assessment return, not instead of.
• If the residential property is held jointly, each owner is required to make their own in-year CGT return, ie, one each for husbands and wives. They might also have different CGT rates. This new regime is aimed at the owners of the property, not the property itself.
• Capital gains arising on overseas properties are not part of this new regime.
• The new 60-day CGT regime could also apply to a sale of a residential property following a gift, a transfer in or out of trust if a CGT holdover relief claim has not been made, or a transfer as part of a divorce settlement.
• If a trust has to submit the new CGT return, HMRC has confirmed that the trust must be registered on the trust registration service.
How can MCL Accountants help?
Contact MCL Accountants on 01702 593 029 if you have any queries regarding the preparation of a CGT return on the sale of a property or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.
- REQUEST A QUOTE
Ishan provides financial management, taxation and transactional advice to business entities of all sizes. His expert areas include statutory compliance, business taxation, personal tax & transactional processing and systems. Industry sectors include professional services, retail, hospitality and entertaining & media and advertising services.