The requirement to report and pay capital gains tax on disposals of UK residential property was introduced in April 2020. However, the reduction of the annual exempt amount to £6,000 in 2023/24 (with a further reduction to £3,000 in 2024/25) means that more people will now be caught and need to be aware of this.
The requirement applies to UK residents who dispose of a UK residential property on or after 6th April 2020 and capital gains tax (CGT) is due. Therefore, if you are selling your only property (Principal Private Residence) then no CGT will be due and a return is not required.
The return must be submitted within 60 days (for sales made on or after 27th October 2021 – previously it was 30 days!) and the tax is payable by this date as well. The CGT rate for the disposal of a residential property is 18% within the basic rate band and 28% in the higher rate band (above £50,270).
The gain will also be needed to be reported on the self-assessment return for the tax year that the disposal takes place in. Credit will be given for the tax already paid within the 60 days.
The CGT on UK Property Return must be submitted online. An agent can submit the return on your behalf. Please get in touch if you think you need to make a return and need assistance with preparing and submitting the return.
Regardless of who submits the return, the taxpayer needs to set up a CGT UK Property account. You will also need to set up a Government Gateway account first if you do not already have one.
The information that will be needed to complete the return will include:
- Address and postcode of property
- Date the property was purchased/inherited
- Date contracts were exchanged when selling the property
- Completion date of the sale
- Value of property when purchased/inherited
- Value of property when sold
- Costs of buying, selling or making improvements to the property
- Details of any tax reliefs, allowances or exemptions that are applicable
Once the CGT return on UK property return has been completed and submitted, a payment reference number will be provided. This payment reference number must be used when making the payment of the tax liability to HMRC. The payment needs to be made within 60 days of the disposal of the property.
If you are looking to sell a property, please contact us as soon as possible so that we can assist you with the calculation of the tax liability and preparation and submission of the return. We may also be able to help minimise the tax liability if you contact us pre-disposal, by transferring some of the ownership to a spouse or civil partner (assets can be transferred to a spouse/civil partner at no gain, no loss). This is especially useful if the spouse/civil partner is a basic rate taxpayer and therefore more of the gain can be taxed at 18% rather than 28%. It also means the annual exempt amount can be doubled as each person gets £6,000 each.