Capital gains tax – Sneaky rules?

WARNING For those who aren’t aware:  Taxpayers have 60 days from the date of completion of the disposal (not the date of exchange of contracts) to report the property disposal and pay the estimated CGT to HMRC. Late filing penalties may be charged, together with interest on any unpaid tax.

We sold 2 out of our 7 rental flats, even though there was little capital gain to report we were fined a huge sum for late return. The accountants knew we had sold the first property 2 years ago, but either they didn’t know or forgot to tell us that these rules now exist.

We assumed the solicitor change at land registry would be enough.

We sold because there is little incentive to own buy to lets, at least market rents are rising.

We will not be buying again, therefore reducing the available properties which in turn will increase renters’ competition.

We are good landlords, never putting up rent between tenants and maintaining the properties. We may have to rethink this.

TC

Editors Note:

.Gov >>https://www.gov.uk/government/publications/capital-gains-tax-payments-on-property-disposal-time-limit-extension/capital-gains-tax-payments-on-property-disposal-time-limit-extension

General description of the measure

This measure extends from 30 days to 60 days the time limit for making Capital Gains Tax (CGT) returns and associated payments on account when disposing of UK land and property.

This measure also clarifies the rules for mixed use properties, which applies to UK residents only.

Policy objective

This measure allows taxpayers more time to produce and provide accurate figures, particularly in the more complex cases, as well as sufficient time to engage with advisers.

Background to the measure

UK residents that dispose of an interest in UK residential property that results in CGT to pay are required to deliver a CGT return to HMRC and make a payment on account of CGT within 30 days of the completion of the disposal.

Non-UK residents are required to deliver similar returns in respect of any direct or indirect disposal of UK land, irrespective of whether tax is due or the type of property, and make payments on account of CGT (where due).

In May 2021 the Office of Tax Simplification made recommendations on CGT including that the government should consider extending the 30-day deadline to 60 days.

This measure was announced at Autumn Budget 2021.

Detailed proposal

Operative date

This measure will have effect for disposals that complete on or after 27 October 2021.

Current law

Current law is contained in Schedule 2 to the Finance Act 2019.

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