From 6 April 2020, where Capital Gains Tax is due on the disposal of a UK residential property, you’ll be required as an individual or a trustee to file a new standalone online return, together with a payment on account, within 30 days of the transaction’s completion date.
These Capital Gains Tax changes will apply to all individuals and trusts – including those who already submit UK self-assessment tax returns.
A ‘disposal’ covers both a sale and a gift of a property. And if you hold a property jointly – or in a partnership – each owner will have to submit an online return and pay the proportion of the Capital Gains Tax due on their share of the disposal.
There are some exceptions
You won’t have to file an online return when:
- The capital gain is covered by principal private residence relief
- A loss arises
- You have capital losses which cover the capital gain
- Your annual exemption covers the capital gain.
And there are a few more requirements
As well as having to complete and submit an online return (separate to your UK tax return), you’ll also be required to pay an estimate of the Capital Gains Tax due. And this will be treated as a ‘payment on account’ against your total Capital Gains Tax liability when your UK self-assessment tax return is submitted to HMRC.
You’ll also need to report the disposal on your UK self-assessment tax return – regardless of whether you realise a capital gain or loss. Penalties for late filing start at £100, but if the return is filed up to 12 months late, that can go up to 10% of the Capital Gains Tax due.
You’ve got some time to adjust
HMRC have confirmed they won’t issue any penalties for late returns received up to and including 31 July 2020. For UK residents, this means transactions completed between 6 April and 30 June 2020, and reported up to 31 July 2020.
Transactions completed from 1 July 2020 onwards will receive a late filing penalty if they’re not reported within 30 days. And interest will accrue if the tax remains unpaid after 30 days.
Received an offer on your property? Got any questions?
Let us know. We’ll work with you to calculate the Capital Gains Tax due and report it to HMRC.