Significant changes of the reporting and payment of Capital Gains Tax on residential properties has now come into force.
As of April 6, any UK resident who sells a residential property and makes a taxable gain will only have 30 days to report it to HMRC; rather than until the Self-Assessment deadline which previously could result in a period of up to 22 months before having to report the gain and pay the tax due.
Any Capital Gains Tax (CGT) arising after selling a residential property must also be reported and paid via a new online CGT return within 30 days of the completion date of the sale.
“The earlier payment of CGT on residential property allows the government to collect any tax owed more quickly,” said Nick Charnley, tax manager at Ellis & Co.
“Previously any taxable gain was declared and then collected via a yearly self-assessment, now the deadline is only 30 days after the sale.
"Some taxpayers may not know whether they will be a basic or higher rate taxpayer before the end of the tax year and so will have to make a best guess approach to which CGT rate is applied to the gain and amend the CGT return if needed.
“Although the new form must be completed within this new deadline, the gain must also be reported on a self-assessment tax return," he added.
HMRC will allow a period of adjustment and have announced that no late filing penalties will be charged for transactions arising before 30th June 2020 and not reported on time but late payment interest will be charged if the required liability isn’t paid within 30 days.
For further information on this, or any other tax matter, contact Nick on 01244 343504.