Why it pays to be aware of Capital Gains Tax deadlines

FROM April 6, 2020, there were significant changes to the reporting and payment regime in respect of capital gains made from disposals of UK land and property by individuals, trustees and personal representatives.

The aforementioned individuals, trustees and personal representatives may be required to file a standalone Capital Gains Tax (CGT) return and make a CGT payment following the disposal of land or property.

While in general for CGT purposes the date contracts are exchanged is normally treated as the date of disposal (or the satisfaction of the final condition in a conditional contract where relevant), the deadline for filing standalone CGT returns is based on the date the disposal of the property completes.

The filing deadline is 60 days from completion for disposals that complete on or after October 27, 2021.

The payment due by the same 60-day deadline will normally be the full expected CGT liability, although the filing requirement is waived where there is no Capital Gains Tax payment due.

Typically, this exception will apply where full Private Residence Relief applies to the property or it has been sold at a loss.

In determining the level of the CGT payment, capital losses incurred in the same tax year on other assets on or before the date of completion of the property sale, can be taken into account and losses brought forward from earlier years might also available.

Losses incurred after the date of completion must be ignored, even if they will be offset on the self-assessment tax return.

Any excess CGT will generally be repayable when the selfassessment tax return is filed.

Unless it is clear that there is no CGT payment due, the prudent position would be to submit a standalone return within the 60-day window, together with a payment of 28 per cent of the chargeable gain.

This is because interest and penalties may apply if returns are not submitted and insufficient payments are made. Non-UK residents who dispose of UK residential properties are subject to the CGT reporting and payment regime but there are differences and there is no exemption from filing obligations where there is no CGT payment due.

Separate automatic penalties apply to late filing of the standalone CGT return and late payment. The penalties are cumulative and can only be appealed if the taxpayer has a reasonable excuse for the failure.

Penalties for filing after the 60 or 30-day deadline £100. More than six months late then £300 plus and five per cent of tax is due. More than 12 months late then greater of £300 and five per cent tax.

Late payment penalties for being 30 days after January 31 in the tax year following the year of disposal and the same amount is due for five months after first penalty and a further five per cent is due 11 months after first penalty.

Additionally, HMRC has can charge daily penalties of £10 per day up to a maximum of 90 days if the return is more than three months late. Interest is charged if the tax remains unpaid after 60 days from completion.