From April 6, 2020, all UK resident individuals, trustees and personal representatives who gift or sell UK residential property have had to calculate, report and pay an estimate of the capital gains tax liability within 30 days of the date of completion. This new provision primarily affects landlords and second-home owners.
This ‘in-year’ reporting is a big change from only reporting such disposals after the end of the tax year via self-assessment. It requires taxpayers to use special rules to determine their estimated CGT liability before the end of the tax year. Only those with residential property disposals where a CGT liability does not arise (for example because private residence relief covers the gain), are excluded from these reporting requirements.
Should you miss the 30 day deadline, there is an initial penalty of £100, and then an increasing scale of penalties dependent upon how long before you pay the tax due. In the last six months of 2020 HMRC issued over £1.3million in fines for late reporting and payment.
The report and payment must be made online here.
It is important that the property disposal is also reported as part of your self-assessment, so any adjustments can be made at the end of the tax year. The appropriate pages within the self-assessment return have been updated to request details of previously reported disposals.