When you dispose of a UK residential property (or if non-UK resident, any UK land), unless for whatever reason there is no Capital Gains Tax (CGT) due, you must report the Gain and pay the CGT due to HMRC online within 60 days of completion.
When calculating the gain, you are allowed to deduct other known CGT losses or reliefs in existence as at the date of disposal but not those arising later in that same tax year. As capital gains are deemed to be the highest part of your taxable income, unless you know accurately what your income will be, you may need to estimate your CGT liability and then amend the CGT Report as more information becomes available.
When you complete your annual Self-Assessment (or Real-Time) Return, you are required to include the disposal again and calculate your final CGT exposure (this time with any further losses or reliefs after the date of sale). If there is a difference between the final amount of CGT due and paid already, you have to amend the CGT report again and pay the difference immediately (or wait ages for a refund).
This method of settling CGT on residential property has not changed the ultimate amount of CGT due – it has just brought forward when the CGT is payable and introduced another tier of reporting, dramatically increasing the chances of penalties and interest. HMRC have recently reported that in 2021/22, roughly 20% of those who should have filed a 60-day report did not (continuing instead to declare the disposal on their annual Tax Return only). The “60-day” penalties are similar to those for late Self-Assessment Tax Returns, so over 12-months’ late could mean penalties in excess of £1,600!
There are few exceptions to reporting and filing online:
- If there is no CGT due, there is no need to file the 60-day report (but you may still need to declare it on your Tax Return);
- If you cannot file electronically, you must obtain form PPDCGT from HMRC and file on paper;
- If, unusually, you file that year’s Tax Return within 60 days of completion, you do not need a 60-day report.
Remember – this applies to gifts of property as well as sales.
Hope this helps.
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