HMRC have identified potential errors regarding the declaration of residential property disposals for Capital Gains Tax (CGT) purposes when completing self-assessment tax returns for 2019/20. The error may be caused by the declarations being made in the wrong box on the returns. HMRC will be writing to everyone for whom a potential incorrect declaration was made of residential property disposals in the “other properties, assets and gains” section of their return . This may have attracted a lower rate of CGT.
What are the rules?
Since April 2020 any UK resident disposing of a UK residential property who has CGT to pay, has to calculate, report and pay the tax within 30 days of completion, which was extended to 60 days in the Autumn Budget 2021 for completion dates on or after 27 October 2021.
HMRC has published an FAQ document which contains further details on various aspects of the service.
What do you need to do?
It will be necessary for individuals to review the property disposals on the return and self correct any errors identified before the 31 January 2022. If individuals are professionally represented then letters will also be sent to their agents. The letters should be sent out by the end of November which does not give long for any corrections to be made.
Reporting of Capital Gains Tax
- Reporting CGT for trusts - UK trusts fall within the new reporting rules and therefore trustees may also need to report residential property disposals within 60 days of completion or 30 days where completion is on or before 26 October 2021, where a gain arises.
- Reporting CGT for estates - Estates disposing of property fall within the new reporting rules, with personal representatives required to report property disposals within 60 days of completion or 30 days where completion is on or before 26 October 2021, where a gain arises
- Reporting CGT for non-resident individuals - Non-resident individuals have had reporting requirements, whether or not CGT is at stake since April 2015 for disposals of UK residential properties. Their obligations were expanded in April 2019 to cover direct and indirect disposals of all UK land. On 6 April 2020, the reporting route for non-residents was also moved to the UK Property Reporting Service.
Find out more
For further information about Capital Gains Tax and the declaration of residential property disposals, please contact our specialist later life planning team who will be more than happy to help.
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