The rules around how long you have to report on and pay your Capital Gains Tax (CGT) when selling residential property changed on 6 April 2020 to 60 days after the sale.

If you are a UK resident and dispose of UK residential property, you will need to pay your CGT and submit CGT returns, within 60 days of completion of the sale. For example, if the sale completes on 1 July 2020, the CGT will be due by 30 July 2020. Prior to April 2020, you had either 10 or 22 months to pay CGT, so this is a big change.

Due to the coronavirus pandemic, the government gave a 3 months adjustment period, which meant that the reporting deadline was extended so that no late filing penalty will be charged for any transactions completed between 6 April 2020 and 1 July 2020. However, that period has now come to an end and any CGT on disposals of UK residential property must be reported by 31 July to avoid a penalty.

Transactions completed from 1 July 2020 onwards will receive a late filing penalty if they are not reported within 30 calendar days. Interest will accrue if the tax remains unpaid after 60 days.

UK residents are required to report gains on UK residential property only where tax is due.

What will happen if you don’t pay CGT within 60 days?

There will be penalties and interest charged for failure to do so. HM Revenue & Customs (HMRC) have been communicating the change in rules. Therefore, it will be much harder if you miss the deadline, to successfully appeal against any penalties and it is crucial you seek tax support to ensure you comply with the new rules. Ellacotts expert tax team can take the stress away and carry out the CGT return work for you.

The new rules apply to individuals, trustees and personal representatives. There are some exemptions in place with regards to certain sales, for example, the sale of your main residence, which has been used solely as your private residence during the time it was owned. This is because the disposal will be covered by Private Residence Relief.

Non-UK residents reporting requirements

Non-UK residents are already within this regime and from 6 April 2019, this was extended to apply to direct and indirect disposals of all UK land (whether or not a gain arises).

Non-residents must also report on:

  • residential UK property or land (land for these purposes also includes any buildings on the land)
  • non-residential UK property or land
  • mixed-use UK property or land
  • rights to assets that derive at least 75% of their value from UK land (indirect disposals)

What should you do about the CGT changes?

Landlords have faced so many changes over recent years; the restriction to the mortgage interest relief, additional Stamp Duty Land Tax and the new regime for non-UK residents mean that the new payment regime is yet another cash-flow blow.

If you own property and you haven’t yet had tax advice to understand how this will impact you and understand the planning options that are available, then Ellacotts would be happy to help. Our tax team specialise in property taxation for landlords and are well placed to advise. Contact us by email or on 01295 250401 or contact us here.

Information for readers: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.