Who has to complete a 60-day capital gains tax return on uk property?

As we move into Self Assessment silly season this month, we’ve come across a couple of clients that sold properties during 2020/21, but weren’t aware of the new CGT reporting requirement.

The requirement to report Capital Gains on UK residential property to HMRC soon after sale completion started in April 2020, but we are still finding that knowledge of the new reporting regime is limited. It will often be flagged by the conveyancing solicitor handling the sale, but not always, and we are finding that there is a lot of confusion out there.

The reporting requirement can be best explained by considering the following Q&A’s:

Q:  I’m already registered for Self Assessment, can’t I just include it on my tax return instead?

A:  No.  Since April 2020 any sales of UK residential property require you to report your Capital Gain on the property, and pay the CGT owed, within 60 days of completion.  You then also have to include the gain on your Self Assessment tax return together with a note of the tax already paid.

Q:  I thought it was a 30 day return?

A:  It used to be, but it was changed to a 60 day return for residential property sales completing on or after 27 October 2021, to allow a bit more time.

Q:  What if the property was my home throughout?  Do I still have to do a return?

A:  No.  Private residence relief should cover any gain you have made so no CGT will be due and no report will be needed.

Q:  What if it used to be my home, but then I rented it out?  Do I still have to do a return?

A:  Yes you probably do.  Partial private residence relief will apply, but you may still end up with a Capital Gain that exceeds your £12,300 CGT annual exemption and if that’s the case you need to file a 60 day return.

Q:  What if I made a gain on the sale of property that’s below my annual exemption?

A:  If you are confident that your Capital Gain is below £12,300, and you are not using that allowance against other gains in the tax year that contracts of sale were exchanged, then you don’t need to file a 60 day return.

Q:  I’m not UK resident?  Do I have to file a 60 day return?

A:  Yes you do.  Non-UK residents have been required to pay CGT on UK property disposals since 2015, but they now fall under the main 60 day reporting regime for residential property sales.

Q:  I’ve sold a commercial property.  Do I have to file a 60 day return?

A:  No.  The 60 day reporting requirement only applies to residential properties.

Q:  I’ve sold a mixed-use property.  Do I have to file a 60 day return?

A:  Yes.  You need to report and pay your CGT on the residential element within 60 days of completion.

Q:  I haven’t reported but now realise I should have?  Will a penalty be charged?

A:  Yes, unfortunately it will.  The late filing penalty is £100 if you then file the return within 6 months of the 60 day reporting deadline (or 30 day deadline if completion was prior to 27 October 2021).  If you file more than 6 months late an additional penalty of the greater of £300 or 5% of the CGT owed is added to the initial £100 penalty.  If you report more than 12 months late a further penalty of the greater of £300 or 5% of the CGT owed is added to the first two penalties.

Q:  Are there any penalties for paying the tax late?

A:  HMRC are not currently issuing penalties for the late payment of CGT, and have confirmed that they will not do so until after 31 January 2022.

Q:  Will I be charged interest if I don’t pay the CGT within 60 days of completion?

A:  Yes, you will.  Late payment interest will be charged.

If you need help calculating your gain, or completing your 60 day CGT on property return, then we would be very happy to help.