New Capital Gains Tax payment date on sale of residential property

7th May 2020

The way in which the sale of UK residential property is reported changed fundamentally on 6 April 2020. Under this new policy, capital gains must be calculated and a payment on account of the Capital Gains Tax paid within 30 days of completion of the property sale.

The new rules will not apply where the gain is not subject to Capital Gains Tax, for example, where Principal Private Residence (PPR) relief is claimed in full or the gain is covered by unused losses.

When to report?

You will need to report and pay Capital Gains Tax when, for example, you sell or otherwise dispose of:

  • A property that you have not used as your main home
  • A property that has been used as your main home, but the sale includes land/buildings that do not qualify for PPR relief
  • A holiday home
  • A residential property which has been rented out

You will not be required to report disposals in the following cases:

  • Where the contract for the sale was made before 6 April 2020
  • The disposal qualifies for full PPR Relief
  • The disposal was to a spouse/civil partner
  • The gain is within the annual exemption (£12,300 for 2020-21)
  • The property was sold at a loss

How to report

HMRC has launched a new online service to enable gains to be reported and Capital Gains Tax to be paid. As agents we will have online access to report disposals of residential property and ensure that any Capital Gains Tax is paid within 30 days on behalf of our clients. The taxpayer will also require a Government Gateway account to authorise us to file the Capital Gains Tax return on their behalf.

The final capital gain should be disclosed on the Self-Assessment tax return to include claims for additional reliefs and losses.

Failure to report

Penalties and interest will be charged if there is a failure to notify HMRC within 30 days of the sale. Also, if the estimated tax paid proves to be an under estimate, interest will be charged on the shortfall. It is important that you notify us as soon as you put a property on the market, so we can make an accurate calculation of your gain as soon as the sale has completed thereby enabling the tight deadline to be met.

Due to the COVID-19 pandemic, late filing penalties will not apply on disposals of UK residential property completed on or after 6 April 2020 and before 1 July 2020 and reported up to 31 July 2020. Transactions completed from 1 July 2020 will receive a late filing penalty if they are not reported within 30 calendar days and interest will be charged if the tax remains unpaid after 30 days for all transactions from 6 April 2020.

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