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Changes to Capital Gains Tax on the disposal of UK property

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Important changes to the deadline for reporting and payment of CGT on the disposal of UK property, these changes apply to both UK and Non-UK Residents.

What has changed?

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From 6th April 2020, an Individual, trust or executor/executrix of an estate who sells a UK residential property may be required to complete a ‘real time’ CGT return and pay any CGT due within 30 days of the completion date of disposal.  

This is replacing the previous method of reporting capital gains for UK residential property. Previously, this would be reported via your UK self-assessment tax return on the capital gains tax pages for the relevant tax year in which the sale took place, with payment not falling due until 31st January in the following year.

Under the new reporting regime, the capital gain will still need to be reported on your self-assessment tax return, but this will be supplementary to the real time tax return and the payment of CGT required within 30 days of completion.

Who is impacted?

As mentioned, these changes apply to any individual, trustee, executor or executrix of an estate who sells/disposes of a UK residential property from the 6th April 2020 onwards. If you hold any interest in a UK residential property you will be required to complete a capital gains tax return to report the sale and to pay the capital gains tax liability.

For UK residents, a return will not be required if there is no capital gains tax liability.

For non-UK residents, a non-resident CGT return must be completed within 30 days of the disposal of any UK property, regardless whether a profit or loss was made upon sale.  The only exemption to this is where the property was your main residence for the entire period of ownership (which clearly is rare of those who are non-UK resident).

Type of property

All UK residential property that is not occupied as a main residence, will fall within the reporting requirements.

Therefore, if you own an interest in a property which you do not occupy i.e. it is let out as a buy to let or is held as an investment property, you will need to complete a capital gains tax return. 

While the new reporting requirements have only been in place since April 2020 and although many sales have been postponed or blocked due to Covid-19 restrictions, we have already successfully helped a number of existing clients and buy to let landlords.

Implications of not meeting the reporting requirement

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If you meet the conditions requiring you to complete a capital gains tax return and subsequently you fail to report and pay within the 30day deadline, HMRC will issue both late filing and payment penalties. Interest will also be charged on any late paid tax.

HMRC have access to the land registry and therefore are fully aware when a change in ownership of UK residential property occurs.

Overview of the reporting and payment process

The steps below outline what needs to be done upon completion of the sale:

  1. All matters need to be processed, filed and the tax paid within 30days.
  2. Collate details and documentation relating to the property purchase and sale.
  3. Confirm that there is a capital gains tax liability.
  4. Set up a personal government gateway account.
  5. Create a capital gains tax property account.
  6. Complete the capital gains tax return and pay the tax liability.

How can Menzies help

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As agents we can complete and file the real time capital gains tax return on behalf of our clients.  We can also help prepare and submit your annual self-assessment tax return for the relevant year too.  

If you are required to report and pay capital gains tax under the new 30 day reporting deadline, please get in touch with either your Menzies contact or a member of the personal tax team as early as possible; either just shortly prior to the completion date or soon after.  This way we can ensure that all the information required can be collated and the 30-day deadline can be met.

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David Ansdell - CTA

Senior Manager

David Ansdell is a Senior Manager in the Menzies Woking office specialising in corporate tax advisory and private client tax planning services.