Changes to Capital Gains Tax on private residences

Capital Gains Tax (CGT) due within 30 days Under current rules, taxpayers do not have to complete a tax return and pay Capital Gains Tax (CGT) until the self-assessment deadline of January 31 after the tax year in which the disposal is made, potentially giving them up to 22 months.

A new requirement for UK residents to report and pay CGT on disposals of UK residential property within 30 days was introduced in April 2020.

A CGT return will need to be completed and submitted to HMRC, along with a mandatory payment on account (where applicable).

The requirement applies to UK residents only where tax is due.

The report is made using a new HMRC digital service and the report and payment are both due 30 days after the completion date.

In addition, the gain will still need to be reported in the usual way via the self-assessment tax return.

Furthermore, a return and payment on account within 30 days of completion will not be required where there is no tax payable – e.g. the gain is fully covered by private residence relief, brought forward losses or the annual exemption.

There will be immediate penalty of £100 if you don’t file the UK land return within 30 days of the UK residential property disposal.

If the return is more than six months late then a penalty will be, higher of £300 or five per cent of the tax due.

If the return is more than 12 months late then a further penalty will be payable which is, again, higher of £300 or five per cent of the tax due.

HMRC might charge the £10 daily penalty up to 90 days (between three months and six months of filing date).

Higher-rate taxpayers pay 28 per cent on gains from residential property, while basic-rate taxpayers pay 18 per cent (or 28 per cent depending on the size of your gain, your taxable income and amount above the basic rate).

HMRC has developed a new digital service to support this requirement.