Property Capital Gains Tax

A new property capital gains tax (CGT) reporting regime has been in place since April 2020, but there can be confusion regarding who falls within this regime and what their obligations are.

Under the regime, there is a requirement to report the disposal of UK property on a separate Property CGT Return and pay the CGT within 60 days of the completion date. (This will generally be the date on which funds are received and not the date on which contracts are exchanged.) Individuals who are self-assessment taxpayers will also need to declare disposals made on the CGT pages of their tax return.

When a UK property is sold, it will be necessary to calculate the gain or loss arising using the normal CGT rules, with relief due (for example, main residence relief) being calculated as normal. The CGT liability itself may need to be estimated. If this is too high, provisions exist to allow it to be repaid through the submission of either an amended property CGT return or the self-assessment tax return.

So when does a property CGT return need to be submitted?

Disposal by a UK resident of a UK residential property 

A Property CGT Return needs to be submitted and CGT paid within 60 days of the completion of the sale, when the disposal results in a CGT liability. (If there is no CGT liability, perhaps because there is a capital loss on disposal or the gain is covered by reliefs, there is no need to submit a CGT return.)

Disposal by a non-UK resident of any UK land or property

A Property CGT Return needs to be submitted within 60 days whether or not there is CGT to pay. If there is a CGT liability, it must be paid within 60 days.

 A Property CGT Return may be required on a gift as well as a sale of property. There is no requirement to submit a Property CGT Return on the sale of overseas property.

 The preferred method of lodging a Property CGT Return is electronically. A CGT Property Account will need to be created using your government gateway ID.  Alternatively, taxpayers who are unable to lodge a tax return digitally have the option of using a paper form and this is currently available to download through the HMRC website.

 If you become aware that a Property CGT Return is required, it will be important to submit the return and pay the tax on time otherwise HMRC will charge interest and/or penalties. Information used to complete the return should be retained as it may be requested by HMRC at a later date.

 If you have sold UK property and require advice on either determining the CGT position on sale or submitting the return to HMRC, please get in touch.

Photo by Dan Smedley on Unsplash.