More time for 30-day reporting of CGT

  • 14th April 2020

HMRC has confirmed that it will not charge a late filing penalty for reports of capital gains tax (CGT) on disposals of UK residential property by UK residents.

HMRC is “allowing a period of time to adjust and will not issue late filing penalties for CGT payment on account returns received late up to and including 31 July 2020.

For UK residents, this means transactions completed between 6 April and 30 June 2020 and reported up to 31 July 2020. Transactions completed from 1 July 2020 onwards will receive a late filing penalty if they are not reported within 30 calendar days. Interest will accrue if the tax remains unpaid after 30 days.”

What are the changes?

The changes mean that capital gains tax is now paid within 30 days of completion rather than the 31st of January following the end of the tax year, which was the case prior to 6th April 2020. This change can accelerate the tax collection by up to 21 months.

The legislation that came into force on 6 April stated that ‘if a UK resident sells a residential property in this country, they will now have 30 days to tell HMRC and pay any money owed. The changes also apply for non-UK residents selling both residential and non-residential property in this country. Non-UK residents will still be required to tell HMRC within 30 days whether there is tax to pay or not and will no longer be able to defer payment via their Self-Assessment return.

Defined by HMRC:

  • UK residents disposing of UK residential property

The changes for UK residents only apply to disposals of UK residential property. From 6 April 2020, a UK resident disposing of a residential property in the UK making a gain which is liable to CGT will have 30 calendar days from the date of completion to tell HMRC and pay any CGT owed. They will be able to do this using a new online service. This doesn’t apply if the residential property is the person’s home and it’s been used solely as their private residence during the time it was owned. This is because the disposal will be covered by Private Residence Relief.

  • Non-UK residents disposing of UK property

Non-UK residents must continue to report sales or disposals of interests in UK property or land regardless of whether there is a CGT liability, within 30 days of completion of the disposal. This includes disposals of residential properties, non-residential properties and indirect disposals. From 6 April 2020, there is no longer an option to defer payment of CGT via a Self-Assessment return, and any tax owed must be paid within the 30-day reporting and payment period. From 6 April 2020 non-UK residents will be able to use the new online service, which will replace the current reporting service.

The Institute of Chartered Accountants England and Wales (ICAEW) received confirmation from the HMRC in the form of a question and answer factsheet which can be viewed here.

Any news or resources within this section should not be relied upon with regards to figures or data referred to as legislative and policy changes may have occurred.