From 6th April 2020, UK tax residents have had to report disposals of UK residential property to HMRC, and pay the Capital Gains Tax (CGT) due, within 30 days of completion. Non-UK tax residents have been obliged to report any disposals of any UK property or land (residential or commercial) and pay any CGT due within the same time limits. The Autumn Budget has changed that, and you can check out our summary of it here.
For disposals of UK residential property that are completed on or after 27th October 2021, the reporting and payment deadline will be 60 days after the completion date. However, disposals that were completed before 27th October 2021 are still subject to the 30-day deadline, so make sure you don’t miss the deadline by accident!
This has been a welcome change throughout the industry and the Chartered Institute of Taxation who have been pushing for changes to the CGT system for some time. The original 30-day deadline has proven challenging due to the digital nature of the process and the delays encountered in receiving information from HMRC. The new 60-day filing window provides a well needed extension to the reporting period, particularly for individuals who may have complex disposals. As a firm of accountants, we are particularly pleased with the extension, as it provides sufficient time for taxpayers to set up and report disposals online.
A concern however, is the lack of awareness of the new reporting system among taxpayers, who may still think that such gains are report via a Self-Assessment Return.
What do I need to report my CGT?
See below a list of information that you will need to have to hand to report your CGT gains:
- Capital Gains Number (details on how to acquire below)
- Postcode of their Primary Residence
- Property Completion Statement (showing Sale value and any legal fee costs)
- Address of Property (that you are reporting the gain on)
- Percentage Share of Property
- Purchase Date
- Purchase Cost
- Capital Improvement Costs
- Estate Agent/Solicitor Fees
- Details of individual’s earnings for the tax year (that you are reporting the gain in)
How to acquire a Capital Gains Reference
You will need to set up a Property Tax Account with HMRC. If you already have a Personal Tax Account, you can use these details to create a Property Account. Follow the green ‘Start’ button after clicking on this link: Report and pay Capital Gains Tax on UK property and sign in with your Personal Tax Account details. It should then take you around 5 minutes to create a Property Account.
If you do not have an existing Personal Tax Account with HMRC, you will need to create a Government Gateway account first and verify your ID. Follow the same link as above, however when you arrive on the ‘login’ page, under the sign-in box there is a link that says ‘Create sign in details’. Follow the steps on screen to set up your username/password etc. and then continue on to create your Property Account.
At the end of the process, you will be issued with a Capital Gains reference number for the Property Account. This will be a 15-digit number in the format XYCGT1234567890. You must make a note of this, as it will be required for future steps.
What to do if you are using an advisor to submit your CGT report:
Picking up from the end of the registration process for the Capital Gains Number, you will need to provide your advisor with your Capital Gains Number so they can kick off the authorisation process. Once they have registered for this with HMRC, a time-limited link will be generated and communicated to you. You will then need to access your Property Tax Account and approve your agent to act on your behalf. They will then be able to access and prepare your CGT report using their own login details.
Preparing a CGT report on disposals of can be a complex process, and even with the now extended reporting period, it is imperative that you get this correct and submitted on time! In the lead up to a disposal, it would be advisable to contact your accountant and make sure that they are aware, and begin preparing all of the necessary information as early as possible so you can get your report submitted and paid on time.
Our team of experienced professionals are on hand to help with any of your needs regarding CGT reporting, so allow us to take the burden from you and deal with HMRC on your behalf. Get in touch today!
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