Capital Gains

Currently, when a UK resident incurs a CGT liability on the disposal of residential property, the gain is reported within on their annual self-assessment tax return and the taxes due are paid by 31 January following the end of the tax year in which the disposal was made.

From 6 April 2020, when a UK resident disposes of UK land, a CGT return will need to be submitted to HMRC within 30 days of the completion of the disposal, and the full liability will be payable within that same 30-day window.

This means an increased compliance burden, and you must get your information prepared in readiness to file and pay on time. For each property sold, there will be a ‘payment on account’ return which is in addition to your normal annual self-assessment tax return…. This means that you might be filing multiple tax returns throughout the year.

In order to file the payment on account return, a potentially complex CGT calculation will need to be prepared within 30 days, which will mean that full up to date records will need to be available at that time. A reasonable estimate of your expected income for the year will also be needed in order to apply the correct CGT rate to the calculation, along with details of their available unused annual exemption and any unused capital losses.

The new reporting requirements will not apply where there is no CGT payable as a result of the disposal; ie where a gain is covered by the annual exemption or available capital losses, or relieved in full by a main residence relief claim.