60 Day Capital Gains Tax Reporting – The Rules Recap

Almost a year on from the extension of the timeframe for reporting disposals of residential property our blog provides a recap of the rules on what exactly needs reporting, who needs to report it, how is it reported, when is any payment due and what happens if reporting/payment is late. 

Residential Property – What should be reported and by whom?

Disposals of the following UK residential properties fall within the scope of the 60-day Capital Gains Tax (CGT) reporting legislation: 

• Rental properties 
• Farm cottages 
• Holiday homes
• Residential properties which you have not occupied as your main residence for the full period of ownership 

Although the regime is restricted to UK residential properties, the CGT legislation cast a wide net by capturing not only traditional sales but also a gift of a property or a grant of lease.  

The disposal of land does not require reporting nor does disposals of the above-mentioned properties if they result in a loss or if the gain is covered by the CGT annual exemption, currently £12,300, and the taxpayer is tax resident in the UK. 

Non-UK Residents 

In addition to reporting disposals of UK residential properties as mentioned above, non UK residents must also report non residential land and property transactions. This includes reporting of all transactions even if there is no gain, or a loss.  So in summary, if non UK resident, 60 day reporting is required for: 

• Residential Property 
• Non-residential interests in UK land and properties 
• Indirect disposals of an interest in UK land, e.g. the non-resident disposes of shares in a company that owns UK land   

As a result of the 2019 extension to the rules for non-residents, special rules apply for mixed use properties, i.e. properties which are partly residential and partly commercial. 

How is it reported and when is payment due?

Reporting should be done using HMRC’s online CGT on UK Property Account service and to be able to do this a Government Gateway account is required. This can prove difficult especially for clients who are not resident in the UK and in those cases, a submission via a paper CGT property return should be submitted. 

Taxpayers can appoint an agent to complete the CGT calculations and reporting however a digital authorisation to act on behalf of the taxpayer must be in place. 

The due date for settling any CGT liability due is within 60 days of the completion date of the disposal. Payments can only be made after the CGT Return has been submitted and HMRC have generated a specific CGT payment reference number. 

What happens if you report after 60 days?

HMRC charge penalties for late filing and interest on late payment. If a CGT Return is filed more than 60 days following the completion date, an automatic £100 will be levied. A further penalty of £300 or 5% of any tax due, whichever is the greater, is charged if more than 6 months late, followed by another penalty of £300 or 5% of tax due is more than 12 months late. 

If you are considering, or are in the process of, disposing a UK residential property, and you have any questions or would like any further information, please contact Carol Edwards or Yannick Chan or your usual AAB contact.