Capital gains tax on the sale of UK residential properties – a COVID-19 update

On 6th April a new deadline for paying capital gains tax following the disposal of a UK residential property which did not qualify for main residence relief came into force.  The new regime gave individuals and Trustees 30 days from the date of completion to pay the tax due and lodge the new on-line return form.  If no tax is due there is no need for a report to be made.

In the light of the current COVID-19 situation HMRC have confirmed that they are allowing a period of time to adjust to the new regime and they will not issue late filing penalties for CGT payments on account where returns are received late up to and including 31st July 2020.

For UK residents this means that transactions completed between 6th April and 30th June 2020 and reported up to 31st July 2020 will not be subject to late filing penalties but transactions completed after 1st July 2020 will receive a late filing penalty if they are not reported within the 30 day period.  In all cases the guidance makes it clear that interest will accrue on the outstanding tax if it is still unpaid after 30 days.

HMRC have indicated that they will be flexible where payment is difficult due to the COVID-19 crises but this is unlikely to help sellers where they have received proceeds on the sale of the property and where they would be expected to pay the tax from the sale proceeds.  HMRC have indicated that they understand that there will be situations when payment is difficult, for example, where the disposal of the property was by way of gift and where there are no actual sale proceeds being received or if the seller is disposing of the property to find money to invest in a business in response to the COVID-19 crises.

Owing to the fact that the new regime is an on-line payment regime you will need to register with HMRC first and sufficient time should be allowed to enable this to be completed and the information returned before the deadline.  For trustees disposing of UK residential property they can also use the new on-line system but personal representatives disposing of a deceased’s property will need to file a paper return.

* For advice on this or any other related matter, please contact Alan Dawson, Chairman at Sintons, on or 0191 226 7811.

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