Elaine Shiels

Written by: Elaine Shiels

Elaine Shiels

Partner

Residential property: capital gains tax deadline tightens again

From 6 April 2020, UK resident individuals, trusts and personal representatives have 30 days after the completion date to report and pay capital gains tax (CGT) on taxable UK residential property disposals.

As a result of coronavirus, HMRC announced that late filing penalties would not be charged for CGT returns received up to 31 July 2020.

Now that the property market is reopening with the welcome reduction in stamp duty in England and Northern Ireland, and the previous 30-day deadline is being enforced, property owners need to ensure they’re well prepared to avoid hefty penalties.

There are several hoops to jump through before the tax can be reported and paid as HMRC insist taxpayers use the new online “Capital Gains Tax on UK Property” account. This is a completely separate system to a personal tax or self-assessment account and must be set up in good time.

People with tax to pay must create a Government Gateway login and verify their identity online before they can set up a new CGT account. HMRC haven’t yet explained how taxpayers who don’t have access to a computer are expected to report and pay CGT. This is a particular concern as many elderly people are still shielding from their support network.

Under this new system, tax advisors who would usually deal with HMRC on behalf of their clients need to be authorised to access the Capital Gains Tax on UK Property account, despite already having access to the client’s self-assessment account. Each step in this new system seems to chip away at the already limited time which a taxpayer has to fulfil their obligations to HMRC.

You would expect the process to be simpler once the account has been successfully created for the first time. Not so. HMRC’s guidance has been updated to state that only the first return for UK property sales or disposals made in tax year can be submitted online. For any amendments to an existing return or completion of any further CGT returns for the tax year, it will be necessary to contact HMRC. We expect these measures will mainly affect buy-to-let landlords but those selling or gifting second homes will also need to get to grips with the new process.  

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