As a taxpayer in UK you are required to report all income and capital gains on your self assessment tax return.  The rules relating to disposal of residential property are however more demanding and need reporting and paying within 60 days.

Since 6 April 2020 any one resident in the UK has to report the disposal of residential property in the UK within 60 (previously 30) days of completion and any tax due on the gain should also be paid within 60 days.  The return is in addition to reporting the disposal on a normal self-assessment return, it is not instead of.

The clock for the completion of the return starts from completion, not the day on which contracts are exchanged. For CGT purposes, the date of exchange of contracts is almost always the key date for determining when a disposal actually took place, but one cannot say that a transfer of land has actually taken place until it has been completed.

In practice individuals (and trustees) have to make several returns and payments a year if they make more than one reportable disposal. The later return is supposed to take into consideration any previous disposals, broadly to get as close as possible to the ‘right’ figure for CGT.

A return has to be filed only when capital gains tax is due so there are some circumstances when a submission will not be necessary. Typically this will be:

·         when a gain is wholly covered by only or main residence relief;

·         if a loss arises on a sale;

·         if the gain is sheltered by capital losses crystallised before the sale takes place; or

·         if the gain is covered by an individual’s capital gains tax annual exemption or other relief.

Essentially, reports are required for let properties, second and holiday homes, properties that have been inherited or main residences not wholly covered by only or main residence relief, although this is not an exhaustive list. Occasions of charge will not only arise as a result of a sale of the property but also following a gift, a transfer as part of a divorce settlement, a transfer in or out of a trust when a holdover claim is not made or when a change in the profit-sharing ratio in a partnership triggers a gain.

Non-residents disposing of UK land and property must report the disposal within 60 days, even if there is no tax to pay. This applies to all UK land and property, not just residential property. Any tax due must also be paid within 60 days.

We have come across quite a few instances where sellers have not been advised of their obligation to report the sale to HMRC.  If you are concerned about how to tackle the UK Property Reporting Service (also known as the CGT on UK Property Service) designed to report CGT arising on the disposal of UK residential property on or after 6 April 2020, do get in touch with us.

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