Capital Gains Tax: property disposals

Given the significant increase in property transactions over the last couple of years, you should ensure you are aware of the new reporting obligations which could apply on the disposal of your property.

Autumn Budget 2021 reset the capital gains tax (CGT) clock for payments on disposals of UK land and property.

Until the Budget, UK residents disposing of UK residential property had a 30-day window after completion to report gains and pay any tax due. Non-residents disposing of UK property faced a similar deadline, with a need to report whether or not tax is due.

The 30-day regime was itself relatively new and has had considerable teething problems. Over £1.3 million was charged in penalties for late-filed returns in 2020, something attributed, at least partly, to low public awareness of the new rules. Concerns over lack of time to prepare accurate figures, especially in complex cases, were raised by professional bodies.

But the Budget extended the deadline to 60 days from completion for disposals completed on or after 27 October 2021. Where property has mixed-use, the 60-day window applies just to the residential element. For UK residents, the 60-day reporting requirement only comes into play where there is CGT to pay: and CGT on property disposal doesn’t arise in every case. Where a property is always occupied as the only or main residence, principal private residence relief means CGT is unlikely to come into play. Disposals of second homes, disposals by landlords or divorcing couples are more likely to be affected.

If you are selling a UK property and believe you may be required to prepare and submit a CGT return to HMRC, please contact us as soon as possible. You can also refer to our earlier article which answers a number of frequently asked questions in relation to the CGT reporting system.