CGT grace period at an end

A temporary extension to the reporting deadline for UK residential property disposals between April 6 and July 1 2020 came to an end on July 31.

All transactions completed from July 1 will receive a late filing penalty if they are not reported within 30 calendar days

Landlords and second or holiday homeowners who sell their properties for a gain will have just 30 calendar days to inform HMRC and make a Capital Gains Tax CGT payment.

New rules came into force in April this year, which mean if a UK resident sells a residential property in this country, they are given 30 days to tell HMRC and pay any money owed.

If customers don’t inform HMRC about any CGT within 30 days of completion, they may be sent a penalty as well as having to pay interest on what they owe.

Those new filing deadlines were relaxed in May as a result of the Covid-19 crisis, however that period of grace is now at an end.

A capital gain can arise when a property is disposed of. A disposal will typically be where the property is sold by the owner, but it may also apply where a property is inherited and then disposed of, or where a property is gifted.

Owners may need to make a Capital Gains Tax report and make a payment when, for example, they sell or otherwise dispose of:

• a property that they’ve not used as their main home
• a holiday home
• a property they let out for people to live in
• a property that they’ve inherited and have not used as their main home

UK residents won’t have to make a report and make a payment when:

• they meet the criteria for full Private Residence Relief
• the gift was made to a spouse or civil partner
• the gain (including any other chargeable residential property gains in the same tax year) is within their tax-free allowance (called the Annual Exempt Amount)
• they sold the property for a loss
• the property is outside the UK

From April 2020 there were also changes for non-UK residents selling both residential and non-residential property in this country.

Non-UK residents are still required to tell HMRC within 30 days whether there is tax to pay or not, but there is no longer an option to defer payment of tax via their Self-Assessment return.