Please speak to your usual Statura contact should you wish to discuss the content of this document or indeed the way in which these new provisions will affect your property transactions.
For the provisions to apply, at the time of disposal the 'land' must have either included a dwelling or subsisted for the benefit of a dwelling (broadly, a dwelling is a residential property used or suitable for use as such). Gardens, grounds and outbuildings also count as residential property.
Only taxpayers within the scope of CGT are affected by this new UK land capital gains tax compliance regime. Therefore, these new provisions apply to:
This means that companies, which are subject to Corporation Tax on chargeable gains, are not within the scope of the above provisions and therefore they should continue to report disposals and pay the tax due under the Corporation Tax regime.
Before 6 of April 2020, when a UK resident incurred a CGT liability on the disposal of residential property, the gain was reported within their Self-Assessment Tax Return and the liability was due by 31 January following the end of the tax year in which the disposal was made.
From 6 April 2020, when a UK resident disposes of UK residential property, the individual will need to submit CGT return to HMRC within 30 days from the completion of the disposal (completion date), and the liability will be payable within that same 30-day window.
This will mean that each relevant property disposal will require its own ‘payment on account’ return in addition to the person’s regular annual self-assessment tax return; consequently, the individual will potentially need to submit multiple returns during the same financial year. In order to file the payment on account return, a CGT calculation will need to be prepared within 30 days, which will mean that full up to date records will be necessary at that time.
Already with effect from 6 April 2015, non-UK residents disposing of UK residential property have been required to submit a CGT return within 30 days of completion of the sale and pay the CGT within the same time frame, unless they were already within the self-assessment regime. However, with effect from the 6 April 2019, the option to defer the tax payment until 31 January after the end of the relevant tax year is removed, thus non-UK residents need to submit a CGT return within 30 days and pay any CGT within the same time frame.
Among other measures put In place by the UK Government in order to support and protect UK businesses and individuals affected by the coronavirus (COVID-19) pandemic, HMRC has confirmed it will not charge late filing penalties for reports of capital gains tax (CGT) on disposals of UK residential property by UK residents made by 31 July 2020. HMRC is allowing a period of time to adjust and will not issue late filing penalties for CGT payment on account returns received late up to and including 31 July 2020.