There have been certain changes regarding the payments of CGT, which have been in place since April 2020, which were orchestrated to align the positions of UK residence with non-UK residents.

So, from 6 April 2020, if a UK resident sells a residential property in the UK, they will have 30 days to  to tell HMRC and pay any capital gains tax (CGT) that is owed.

If this individual does not notify HMRC within 30 days of the sale being completed, a penalty maybe in cared and further interest charges for delayed payments.

I report on CGT and tax repayment is sometimes required when the tax payer sells or disposes of

  • a property that they have not used as their main home;
  • a holiday home;
  • a property which has been let out for people to live in;
  • a property that has been inherited and not used as a main home.

There is no requirement to make a report make a payment of tax when:

  • a legally binding contract for the sale was made before 6 April 2020;
  • the individual satisfies the for Private Residence Relief (generally a main residence);
  • the sale was made to a spouse or civil partner;
  • the gains (including any other chargeable residential property gains in the same tax year) are within the tax-free allowance known as the annual exempt amount (£12,300 in 2020/21);
  • the property is sold for a loss; or
  • the property is outside the UK.

How are CGT payments calculated?

Apart from certain exceptions, when a residential property has been disposed of, payment on account of the CGT will be due on the filing date for the return, which is usually within 30 days of the day after the date the property sale has been completed.

The payment that will be due is the amount of CGT notionally chargeable at the filing date. This amount is equal to the amount of tax that will be due even normal rules for calculating chargeable gains for the tax year.

Any unused allowable losses for capital gains purposes incurred by the time the disposal is carried out can be used. The amount of CGT payable on an account is the amount after applying the applicable rate of tax to the net gain.

What if I am making multiple disposals?

If you are disposing of more than one residential property in the same tax year, the amount of CGT notionally chargeable must be calculated after every disposal.

This is done by taking into account that all of the gains or losses on those disposals, and any new losses that have arisen on disposals of other assets can also be used.

Where there has been a previous return and payment on account for the tax year and the amount notionally chargeable contained in a later return is more than the amount of tax already paid on account, the difference is payable to HMRC.

What about provisional figures?

Since it can be hard to get an exact figure within 30 days, HMRC allow for certain estimates and assumptions to be made, with corrections made when exact figures are known.

If you pay too much, the amount is repayable, with interest from HMRC. If you have paid too little, you will have to pay HMRC with interested if it is late.

HMRC are currently developing a new online service that will allow taxpayers to report and pay CGT easily.

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Any questions?

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