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Know the 60-day rule for paying capital gains tax
129,000 taxpayers used HMRC’s online service to report the sale of residential property in the 2021/22 tax year, resulting in 137,000 reports covering 141,000 transactions and £1.7 billion in tax revenue, according to HMRC. About 26,000 returns (10%) were filed more than a month late, suggesting a lack of awareness of the regulations and the associated deadlines.
What information is needed to report capital gains?
If there is a taxable gain, HMRC must be informed within 60 days following the sale of a residential property. Capital gains are taxable if the home you sold was not your primary residence and was used as a residential property (or the whole period bar the final nine months). If more than one person owns the property, each co-owner is responsible for reporting their portion of the gain.
If you have sold a UK property on or after April 6, 2020, you must report the gain to HMRC online (see www.gov.uk/report-and-pay-your-capital-gains-tax). You’ll need the property’s address, postcode, acquisition and completion dates, legal costs, proof of renovation costs, i.e., receipts of work done, and details of any reliefs or allowances to be claimed.
You have 60 days to pay capital gains tax. You can apply the yearly exempted amount (unless it has already been used on residential property gains in the tax year) and any losses not recognized earlier. You must submit a final return with your self-assessment return for the tax year to account for any additional disposals or adjustments made during the year. There is a possibility that your overall tax liability will increase if there is a sale of any other assets resulting in taxable gains. You may also be eligible for a refund if you had a loss on the sale of any further investment or property during the tax year after the CGT return was filled.
If you are a landlord and looking for advice on Capital Gains Tax, please call our office on 08001357323 for specialist advice.