FINANCE
BY CHRIS BALL , ASSISTANT MANAGER / TAX ADVISORY chris . ball @ azets . co . uk
UK residential property owners need to check their Capital Gains Tax liability - 60-day filing requirement
BUYING OR SELLING A PROPERTY IS EXCITING AND , OF COURSE , A HUGE EVENT IN ANYONE ’ S LIFE . HOWEVER , FOR EVERYTHING TO GO SMOOTHLY , IT LITERALLY PAYS TO BE WELL-INFORMED . IT ’ S HARD TO BELIEVE THAT IT HAS NOW BEEN TWO YEARS SINCE THE RULES CHANGED AROUND PAYING TAX ON RESIDENTIAL PROPERTIES . WE ARE HOWEVER FINDING THAT MANY PEOPLE INVOLVED IN PROPERTY TRANSACTIONS ARE STILL NOT AWARE OF THEIR OBLIGATIONS TO PAY ANY CAPITAL GAINS TAX ( CGT ) DUE WITHIN 60 DAYS . THIS IS BACKED UP BY FIGURES FROM HMRC WHO HAVE RECEIVED IN EXCESS OF £ 1.3M IN LATE FILING PENALTIES .
A 60-day ( originally 30-day ) obligation applies to UK residential property transactions where the date of disposal , which is usually the date of exchange of the property , was on or after 6 April 2020 and where CGT is due . Where no tax is due , because of the many reliefs available for UK residents such as Principal Private Residence ( PPR ) Relief and the annual exempt amount , UK residents do not need to report transactions . However , non-UK residents continue to need to report transactions even when no tax is due .
The 30-day limit extended to 60 days in Rishi Sunak ’ s 2021 Autumn Budget – for property disposals where the completion date is on or after 27 October 2021 .
HMRC deem UK residential property to include a dwelling with ancillary buildings and any residential elements of mixed units . As a result , where a landlord or homeowner sells a property ( including a residential element of any mixed units ) and there is some CGT to pay , they must file a separate CGT return and pay any CGT due within 60 days ( previously 30 days ) from the sale completing . If the return is not submitted on time , a £ 100 late filing penalty applies with additional penalties accruing for continued delays . However , depending on the specific circumstances , a range of reliefs and exemptions may be available to minimise CGT .
There are many factors to consider in order to calculate and complete the CGT Return , including determining the time the property was deemed to be occupied as a main residence , and periods not qualifying for PPR Relief during periods of non-occupation , so it is important to start early .
Capital gains is currently payable at 18 % and 28 % depending on the individual ’ s tax position . An accountant can help , including identifying the extent of garden and grounds qualifying for PPR Relief and capital losses and annual exemptions available which could be set against gains . There are also special tax rules around transfers on divorce , between family members , trusts and deceased estates and it ’ s also important to understand the reliefs available to owners who have moved out of their house to nursing homes .
Get the right advice
If you ’ re selling or transferring assets , you need to consider Capital Gains Tax ( CGT ). But understanding the liability on a transaction and the tax reliefs available can be time-consuming and complex . At Azets , our trusted tax specialists are on hand to offer advice and have a wealth of experience in supporting clients on all aspects of CGT , PPR Relief and annual exemption matters . Get in touch with the dedicated Azets Private Client team to find out more .
Local offices : Ashford : 01233 629 255 / Canterbury : 01227 454 861 Maidstone : 01622 690 666 / Orpington : 01689 827 505 Sandwich : 01304 249 997
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