Theresa Mills
Solicitor
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Date Published:12 Nov 2020 Last Updated:10 Apr 2021

Selling Land or Property? A Capital Gains Tax Reminder

Wills, Trusts & Probate

From 6 April 2020 the requirements for reporting and paying Capital Gains Tax (CGT) changed. This applies even if you already submit Self Assessment returns each year.

If you are a UK resident disposing of residential property or land that is not your main residence then you may have to complete a CGT report and pay tax on account of your likely CGT liability within 30 days of completion of the sale. It is not just individuals that are caught; executors and trustees that dispose of residential property are also subject to the same rules.

If the property is jointly owned, each co-owner needs to do their own return.

The most common form of “disposal” is a sale. However, a disposal can encompass a variety of different situations. For example, a gift to a family member, or a transfer following a divorce are other examples of a disposal.

If you are a non-UK tax resident you also have to report non-residential UK property and land, mixed use UK property and rights to assets that derive at least 75% of their value from UK land (indirect interests in land) even when there is no tax to pay.

If a property has not been your principal residence throughout your ownership you may have a CGT liability to report, even if it is your main home at the date of sale.

CGT is only payable on your overall gains in a financial year that exceed your Annual Exempt amount (£12,300 for individuals in 2020/21) but if you have made other capital disposals or are unsure as to any liability please seek advice.

Failure to meet the 30 day reporting requirement will lead to penalties and interest being charged.

Regardless of whether you seek professional assistance with preparing your tax return, or you choose to do it yourself, you will first need to create a “Capital Gains Tax on UK Property”account with HMRC. This is done using your online “Government Gateway” account. If you already have an online “Personal Tax” account with HMRC, you would use the same login details.

Many taxpayers are unlikely to yet have an online Government Gateway account, so the next step would be to separately create a “Capital Gains Tax on UK Property” account (using your Government Gateway login details). Once created, you will be assigned a specific account reference number. If you choose Ellis Jones, or any other firm, to prepare your tax return, then you will need to provide this reference number before the process can proceed.

We recommend seeking advice on your CGT position as soon as you have agreed a sale or other disposal, so that you can be gathering all the information you will need to calculate your likely tax liability and put you in a much better position to be able to meet the tight deadline for reporting and paying the tax.

Our expert tax team can assist with tax planning and the submission of the Capital Gains Tax returns online.

If you would like to discuss your Capital Gains Tax position please contact Theresa Mills in the first instance, on 01202 057743 or by email at theresa.mills@ellisjones.co.uk.