Acceleration of tax payment date for residential property gains

The issue

For UK resident individuals, capital gains tax on residential property is payable alongside other capital gains tax under self-assessment. Therefore tax on any gain made from 6 April 2018 to 5 April 2019 will be payable on 31 January 2020. However the position will change from the 2020/2021 tax year.

New rules

From 6 April 2020 a taxpayer will have just 30 days following completion to submit a provisional calculation of a gain on residential property and pay any tax which is due. The gain will still be reportable in the tax return and this will trigger any further tax due or any repayment due, as appropriate. There will be penalties for failing to report the disposal.

Forbes Dawson view

This is not particularly surprising given that this kind of reporting has been required for non-residents since 6 April 2015. However HMRC faces the challenge of making taxpayers aware of their obligations. There were numerous cases of returns failing to be made by offshore property owners because there was considerable ambiguity about who would take responsibility for any return. The solicitors would generally not do the tax reporting and the accountants were not advised of the transaction by their client in a timely fashion. For this reason it would make sense for HMRC to link the capital gains tax reporting with the stamp duty land tax (SDLT) return. Watch this space!




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