It was welcome news to hear the CGT deadline for reporting disposals of UK residential properties has been extended from 30 days to 60 days. The change came into effect immediately following the budget announcement on 27 October 2021. However, care should be taken for disposals completed before this date as they will be subject to the shorter 30-day deadline.
The extended deadline will be particularly helpful given that the reporting process is not straightforward and requires the setup of a separate UK property account which is not the same as the personal self-assessment account. Furthermore, for those who would prefer their adviser to report the property disposal, there is another layer of process for agent authorisation, all of which can be time consuming resulting in taxpayers being liable to penalties even when they had good intentions to report the disposal on time.
The deadline date has also been extended to non-residents. Many non-residents were struggling to report the property disposal in good time, particularly since 6 April 2020 when they were also required to report their disposal via a UK property account. Whilst setting up a UK property is relatively straightforward for UK residents; it was proving difficult for non-residents who did not have a footprint in the UK therefore the deadline extension will provide some relief to both taxpayers and agents.
The UK property reporting service is a relatively new process introduced by HMRC which has encountered issues along the way and there are gaps in the guidance. Whilst the extension of the deadline date alleviates some of the pressures of reporting the disposal on time, there are other practical issues which also need to be addressed. One particular issue which many taxpayers may face is calculating the CGT liability using the correct tax rate. As the payment of the tax is an ‘in year’ payment, it may be difficult to calculate the tax correctly without knowing what other income and gains are going to arise in the same tax year resulting in an underpayment or overpayment of the tax. ATT have been working closely with HMRC and they have issued further guidance on this which can be found here.
The information in this article was correct at the date it was first published.
However it is of a generic nature and cannot constitute advice. Specific advice should be sought before any action taken.
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