Capital Gains Tax on Property – What’s changed?

CGT may be due if you make a profit (gain) when you sell or dispose of a property ‘that is not your home’, for example:

• Buy-to-let properties
• Business premises
• Land
• Inherited property

The new requirement for UK residents is that a separate report is to be made using a new HMRC digital service, the report and payment of CGT liability is due 30 days after the completion (usually the exchange date). This new rule only applies where tax is due.

Non-UK residents were already subject to alternative rules and cover more than just the outright disposal of a UK residential property, a report is required in this instance even where no tax is due.

What will I need for the report?

To report any capital gains you will need:

• Supporting calculations for each report being made
• details of the sales proceeds and acquisition costs of the property
• a timeline of dates when you acquired and disposed of the property
• any other details, such as the professional selling costs and any tax reliefs you are entitled to such as principal private residence relief

How do I report the gain I have made?

As noted above, selling a property on or after 6 April 2020 requires you to report and pay any tax due using a Capital Gains Tax on UK property account within 30 days of selling it, failure to do so could result in penalties and interest.

If you don’t already have one you will need to Sign in or create a Capital Gains Tax on UK property account. You will need to do this even if you are engaging with an agent to submit the return on your behalf.

You will receive a 15-digit number in the format XYCGTxxxxxxxxxx once you have successfully set up your property account.

You will need your Government Gateway user ID and password to set up a CGT Property account. If you do not have a user ID, you can create one the first time you sign in.

Once you have an account you can sign in at any time to report Capital Gains Tax on UK property or see any returns you’ve already sent.

The reporting step by step process - reporting via an agent

1. Taxpayer creates a CGT on UK property account
2. Taxpayer provides the 15 digit reference to the agent
3. Agent requests electronic authorisation to act on taxpayers behalf
4. Taxpayer accepts the agent authorisation request
5. Agent makes the CGT return submission
6. Taxpayer then logs into their account to make payment

If you are reporting on behalf of someone else or a trust

You need to use your own Capital Gains Tax on UK property account to report on behalf of someone else.

You will need proof you are allowed to report on their behalf, such as a lasting power of attorney. If the person has died, you’ll need to give their date of death.

If you’re reporting as a trustee of a registered trust, you’ll need the trust’s registration number or unique tax reference.

If you have other capital gains to report

If your gain is not from residential property sold in the UK since 6 April 2020, you have a choice of how and when to report the tax.

• Report and pay the tax straightaway
  • You can use the ‘real time’ Capital Gains Tax service immediately if you know what you owe.
  • You need to report your gain by 31 December in the tax year after you made the gain. For example, if you made a gain in the 2020 to 2021 tax year, you need to report it by 31 December 2021.
  • You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay.
  • After you’ve reported your gains, HMRC will send you a letter or email giving you a payment reference number and telling you how to pay.
  • If you need to change your report using the service, you’ll need your report reference number starting with ‘RTT’. You’ll get it by email within 10 days.
• Report your gains in a Self Assessment tax return in the following tax year
  • You can report your gains in a Self Assessment tax return in the tax year after you disposed of assets.
  • Do not wait until the next tax year to report gains on UK residential property sold since 6 April 2020. You may have to pay interest and a penalty if you do.
  • If you do not usually send a tax return, register for Self Assessment after the tax year you disposed of your chargeable assets.
  • After you’ve sent your return HMRC will tell you how much you owe in Capital Gains Tax, how to pay and when to pay by.

The new reporting format has not been widely publicised and given the volume of property sales in recent months many people have failed to report in line with the new requirements.

If you have an imminent property disposal and need support or if you have missed the deadline and need assistance with bringing your record up to date please contact info@forrester-boyd.co.uk