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HM Revenue & Customs (HMRC) have increased the time limit for taxpayers to notify the capital gains tax due when they sell a property from 30 days to 60 days. This means that if you are in the UK on 6th April 2015 or after, but not UK resident thereafter, you will now have 60 days from 5th April in which to inform HMRC about chargeable gains when selling residential property. If you are seeking advice about this we can put you in touch with one of our qualified tax accountants who can guide you through the process and advise you on how best to approach the changes.
To report capital gains to HMRC, you can create an online account using your Government Gateway user ID and password. The HMRC online service provides a simple solution for owners of dwellings and land to report their gains. Using the online service, you can also view, amend, and view previous tax returns which you may find helpful.
The law requires you to report your gain within 60 days of completion. If you are currently waiting for a property sale completion or need to report a non-residential property sale, please ensure that it is reported by the new deadline. This used to be 30 days, but this was extended by the UK government in October 2021. Penalties are charged if the reporting deadline is missed.
To ensure that you comply with the tax rules, you are required to declare a gain from the sale of an asset on your tax return. This gives you 60 days from completion of the sale to file a return and pay any tax due. Furthermore, interest is charged if the tax is paid late. You must pay the amount that is best estimated as due at completion—this could be more than the final amount payable because losses that were realised earlier in the year would need to be taken into account when calculating the gain, and this amount could then be reduced by reducing any annual exempt amount that you have left available for use.
Suzan sold her holiday cottage in January 2022 and incurred a gain of £60,000. Previously in the 2021/22 tax year, she had made a loss on the sale of shares of £4,000. As Suzan is a higher rate taxpayer, she offset her loss against her gain, reducing her gain to £43,700. She must report her gain and make a tax payment of £12,236 (£43,700 @ 28%) within 60 days after the completion date of the sale.
If you’re planning to sell your second home, you probably don’t want to pay a penny more in Capital Gains Tax than you have to. What’s more, you probably want to avoid the most common mistakes—and get the best advice—as you go along.