Published 29th April 2021; Updated 24th April 2024
The deadline to submit a Capital Gains Tax Return, and pay any CGT due, on a disposal of UK land or buildings is 60 days from completion (transfer).
- All disposals of residential property by UK residents has to be reported within 60 days (previously 30 days) of the completion of the sale unless there is no gain, or the gain is fully relieved by the Private Residence Relief (PRR) or the transfer is between spouses living together. The return is made using an online provisional Capital Gains Tax return, and pay a provisional amount of CGT within the same 60 days. The disposal may still have to be reported in a full Self Assessment Return at the normal time.
- All disposals of residential and non-residential property by non-residents has to be reported within 60 days of the completion of the sale using an online provisional Capital Gains Tax return, and pay a provisional amount of CGT within the same 60 days. The disposal may still have to be reported in a full Self Assessment Return at the normal time.
The calculation of the provisional gain can be quite complicated. The taxpayer will have to make an intelligent guess at their level of income for the tax year, to decide how much of the CGT is at the lower rate of 18% and how much is at the higher rate of 24% (10% and 20% for non-residential properties). Not easy when you are self-employed and the disposal is near the beginning of the tax year. Then any losses brought forward may be deducted (including any losses already suffered in the same tax year) but any gains on assets other than residential property will be ignored.
If you make a loss later in the year, there is no facility (at present) to reduce the payments on account of CGT that you have already made until you file the year end UK tax return.
Non-residents also have to arrive at a value of the property at 5th April 2015 (UK residential property) or 5th April 2019 (non-residential property if they owned the property at the relevant date).
Penalties will apply to late Capital Gains Tax returns and these are in addition to any penalties under the Self Assessment regime. That leaves very little time to assemble all the information needed, such as the paperwork relating to the purchase, and of course any allowable improvements. Please contact us as soon as you have a sale agreed.
It is important to remember that very few transactions are exempt from CGT and therefore exempt from reporting. Just because no money changes hands it does not mean the transaction is outside the scope of the tax. The only disposals that are exempt are:
- Where the gain is covered by the PRR
- Where any losses or annual exemption are sufficient to cover the gain at the time the disposal occurs
- Where it is a no gain/no loss disposal eg.: between spouses and civil partners.
Changes in the law
The following changes are now law:
- With effect from 27th October 2021 the gain accruing in the last 9 months of ownership may qualify for PRR.
- At present, when you sell a property that has been your main residence and has been let, you get an allowance of up to £40,000. The UK government has changed this allowance so that it only covers the gain arising when you had part of the property tenanted and part you occupied yourself.
If you are thinking of disposing of any asset, speak to us first
The information contained in this article is believed to be correct at the time of publication. The content of this article is intended to be a brief summary of the principal points of the legislation or proposed legislation only, and it is provided for general guidance only. It may not take into account subsequent changes in the law and of necessity it omits much detail. Taxation is a complicated subject and is subject to change. You should only rely on advice prepared specifically for you. Neither the writer nor Landlords Tax Services Ltd can be held liable for any loss arising from any act or omission by you as a result of your understanding of this article. If the subject matter is of interest you should contact us to see if there is a relevant update, and to take professional advice which takes into account your circumstances.