Since 6th April 2020, HMRC introduced major changes in reporting capital gains tax on the sale of UK residential property. With many people still unaware of the reporting requirements, we at DSG provide a reminder of this aspect of the Capital Gains Tax regime.
Historically, all disposals of UK residential property would be reported on a Self-Assessment Tax Return following the 5th April of the year of disposal. Now, from 6th April 2020, all capital gains made on the sale of UK residential property are required to be reported to HMRC within 60 days and the capital gains tax liability paid in full. For UK residents, the reporting requirement is for gains only, and any losses can be reported later via the Self-Assessment Tax Return. For non-UK residents, all sales of UK residential property must be reported on a Capital Gains Tax Return, regardless of whether a profit has been made.
Properties that fall within the Capital Gains Tax reporting regime are, broadly speaking, any UK residential property that is not a person’s main home, including the following:
- A holiday home
- A buy-to-let property
- An inherited property
The 60-day reporting requirement applies to all UK residential properties sold on or after 27th October 2021. Prior to that, if you sold a property in the UK between 6 April 2020 – 26 October 2021, you were required to pay and report any tax due within 30 days.
If you do not comply with the reporting requirements, penalties and interest will be charged, starting from a £100 penalty for a Return not more than 6 months late and rising to a maximum penalty of £700 or 10% of any tax due (whichever is greater) for a Return that is more than 12 months late.
To report a capital gain you will need to provide HMRC with the following information:
- Details of how much you bought and sold the property for.
- The dates you purchased and sold the property.
- Details of any associated costs relating to the purchase and disposal of the property.
- Details of any capital expenditure work carried out on the property during ownership which has not already been claimed against rental income.
- If applicable, any period of time for which the property was your main residence.
The disposal should be reported using the online Capital Gains Tax UK property disposal service and for this you will need to register for a personal tax account if you haven’t already done so.
DSG can help you complete all the necessary steps in reporting your capital gain. If you require any further information, please do not hesitate to get in touch with your usual DSG contact.