Capital Gains Tax – don’t get caught out by the new 30-day rule
Thursday, 10 June 2021
In accordance with the changes to the Capital Gains Tax (CGT) reporting rules in April 2020, HMRC have begun sending prompting emails detailing the new obligations when disposing of property in the UK.
The emails are being sent from firstname.lastname@example.org and are a legitimate communication from HMRC. However, do be aware that HMRC will never contact you about a tax payment, repayment or any other personal matters over email – so if you are ever in any doubt of an email communication from HMRC, forward this to your Larking Gowen advisor to check for you.
This email prompt is unsurprising as there still seems to be a lack of awareness amongst taxpayers. HMRC have issued late filing penalties totalling £1,311,300 since the introduction of the new 30-day rules in April 2020. Over 13,000 late filing penalties have been issued to landlords and second homeowners who missed the deadline for their property transaction.
What are the new 30-day filing rules? In a nutshell:
- If you are a UK resident individual, executor or trustee, selling UK residential property, you will have to report the disposal and pay any tax within 30 days of completion – not exchange. Our recent blog will provide you with more comprehensive information about the filing obligations.
If you are a non-UK resident individual, trustee or company, selling any land or property in the UK – which can include commercial, residential, land and shares from property rich companies – again, you will have to report the disposal and pay any tax within 30 days of completion – not exchange. Our previous article can provide more detail on this matter for non-residents.
- The 30-day forms must be completed online through a personal Capital Gains Tax account, or by paper in limited circumstances.
- The tax will need to be paid before the 30-day deadline.
- If you miss the 30-day deadline, you will automatically receive a £100 penalty. If the return is a further 6 months late from the 30-day deadline, then the greater of £300 or 5% of the liability will be imposed, and the same again at 12 months from the 30-day deadline.
- Interest will also accrue on the CGT due from the date it would have otherwise been due (if paid later than the 30-day deadline).
If you complete annual self-assessment returns, you will still need to report the disposal on the Capital Gains Tax pages for disclosure.
If you have disposed of UK property and are concerned the rules may apply to you, please get in touch with your Larking Gowen advisor as soon as possible to make the necessary disclosures to HMRC.