Author: Erin Snyman
From 6 April 2020, if you are a UK resident and dispose of a residential property, whether by gift or sale, in the United Kingdom you will have 30 days to report and pay any Capital Gains Tax owed to HMRC. Failure to do so within the 30 days will result in interest and penalties.
If you entered into a contract to sell prior to 06 April 2020 then you would fall under the ‘old rules’ and you only need to report the transaction by 31 January 2021 regardless of when the sale completes.
Be warned that the ‘new rules’ measure the 30-day limit from completion of disposal. The new Capital Gains Tax report will not be required if a self-assessment return has already been submitted, provided the taxpayer has done so before the deadline for reporting under the new system. If the self-assessment return has not been submitted in line with the 30-day limit, then a Capital Gains Tax report will also be required.
You fall into this category if you sell a home on or after 06 April 2020 which is not your main home. This includes, but not limited to;
- an investment property which you rent out,
- a holiday home,
- an inherited home which is not your main home or
- a second home which is not your main home.
You won’t need to make a report if
- the sale was made before 06th April 2020, (Important to note date of completion of disposal)
- the sale was made to a spouse or civil partner,
- the gain is below the annual allowance, currently £12,300 for the 2021 tax year,
- you have made a loss on the disposal or
- the property is outside of the UK.
There are two factors to consider when completing the online report, firstly, capital losses can be used to offset any gain made however only losses that have been accrued by the time of the disposal can be taken into account.
Secondly, a basic rate taxpayer is liable for capital gains tax at 18% and a higher rate taxpayer at 28%. The rate to apply will depend on your annual income which will be an estimation at the time of reporting.
Due to coronavirus (COVID-19), you will not get a late filing penalty for any transactions completed on or after 6 April 2020 to 1 July 2020 and reported up to 31 July 2020.
Transactions completed from 1 July 2020 will receive a late filing penalty if they are not reported within 30 calendar days.
Interest will be charged if the tax remains unpaid after 30 days for all transactions from 6 April 2020.
It is important to note that Non-UK residents continue to need to report transactions even if no tax is due. (The reporting for non-UK residents includes residential properties, non-residential properties, and indirect disposals.)
Should you require support with filing your self-assessment or capital gains please contact our SAIL Team.