New Capital Gains Tax Reporting

21st September 2021

The recent 30 day CGT return reporting requirement is catching people out, don’t let it be you. The residential property market is currently booming, with buyers still trying to make the most of the reduced Stamp Duty Land Tax (SDLT) rates, which are set to end on 30 September 2021. For those selling residential property, it is important to remember what your obligations might be in respect of reporting the disposal to HMRC and paying across any Capital Gain Tax (CGT) due. The new reporting and payment requirement was introduced in April 2020 and requires those disposing of residential property to file a CGT return within 30 days of the disposal.

If the property has been lived in as the owner’s main residence for the entire period of ownership, then there will be no CGT to pay and no reporting requirements, as the gain will be covered in full by what is known as Principal Private Residence relief. However, where the property has not always been the main residence, for example a buy-to-let property or a property used as a second home, and a gain has arisen, it is likely this will need reporting or you should at least confirm no CGT arises and so reporting is unnecessary.

The new reporting requirements have not been very well publicised. Therefore, many of these returns have been missed, as individuals were not advised by either the estate agent or solicitor regarding these obligations.

All professionals involved with the sale of UK residential property should therefore work closely together and ensure that the client in question takes formal tax advice to ensure that they meet their obligations under the legislation.

What are the penalties?
£100 – filing the return more than 30 days late
£300 – filing the return 6 or 12 months late

HMRC has developed a new digital service to support this requirement. The digital service allows agents and taxpayers to make any number of reports and to view the history of previous reports and payment. The functionality to amend reports was released on 14 October 2020. The form that was in use for non-residents to report disposals should only be used for disposals made on or before 5 April 2020.

If you have any questions about the new regime and what it means for you then please get in touch.