Capital gains landlords

Significant changes to the administration and payment dates of UK capital gains tax on property disposals are being introduced.

Significant changes to the administration and payment dates of UK capital gains tax on property disposals are being introduced.

Currently, when a UK resident incurs a CGT liability on the disposal of residential property, the gain is reported within their annual self assessment tax return and the liability is payable by 31 January following the end of the tax year in which the disposal was made.

From 6 April, when a UK resident disposes of UK land, a CGT return will need to be submitted to HMRC within 30 days of the completion of the disposal, and the full liability will be payable within that same 30-day window.

This will mean an increased compliance burden for such taxpayers, said RNS partner Jenny Camm.

Each relevant property disposal will require its own 'payment on account' return in addition to the person's regular annual self assessment tax return, resulting in the potential for multiple filing deadlines throughout the year.

In order to file the payment on account return, a potentially complex CGT calculation will need to be prepared within 30 days, which will mean that full up to date records will need to be available at that time.

 A reasonable estimate of the person's expected income for the year will also be needed to apply the correct CGT rate to the calculation, along with details of their available unused annual exemption and any unused capital losses. 

Currently, UK resident individuals and trusts have between 10 and 22 months to pay any CGT due on the disposal of residential property, meaning that in the interim they can use those funds at their own discretion.

Jenny said: “Our advice to clients is please tell us about residential property sales as soon as they are agreed, so we can help calculate the tax due and submit the property disposal return to HMRC within 30 days of the completion date.”

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