Tax reporting deadline for additional property sales extends

 

Buy-to-let landlords and second homeowners have twice the amount of time to report and pay capital gains tax after selling a residential property in the UK.


The deadline to report and pay capital gains tax after completing the sale of additional UK residential property (where Private Residence Relief does not cover the full gain) is now 60 days - up from 30 days.

The change came into immediate effect after the recent Autumn Budget, and applies to completions made on or after 27 October 2021.

This extension also applies to non-UK residents disposing of any type of property in the UK, whether directly or indirectly owned.

When mixed-use property is disposed of, the 60-day payment window will apply only to the residential element of the property gain.

Previous controversy

On 6 April 2020, the 30-day payment window was introduced with surprisingly little fanfare.  In fact, very few taxpayers knew about it at all.

This affected buy-to-let landlords, second homeowners or those with holiday homes, and accidental landlords.  That remains the case now.

If one of these taxpayers sold up and made a taxable gain, any capital gains tax owed had to be reported and paid within 30 days.

Before April 2020, any tax owed was due at the end of the following tax year, usually between 10-22 months after the sale was completed, so the new rules significantly advance the timescale for paying the tax bill.

Implementing a recommendation 

The extension implements a specific recommendation contained in a report published by the Office for Tax Simplification (OTS) in May 2021.

It claimed that many taxpayers only found out about their capital gains tax obligations after they had completed the sale of their property.

This left around 150,000 people with insufficient time to consider if they had a gain, and even less time for the 85,000 people who had to report it.

Between 6 April 2020 and 6 January 2021, one in three UK property tax returns were filed later than the 30-day window according to HMRC.

How to report 

First, a capital gains tax on UK property account needs to be set up on HMRC's website.  This provides the facility to report the disposal, pay any tax due, and amend any previous returns.

Once set up, the online capital gains tax disposal return needs to be completed within 60 days of completion if any tax on gains from additional residential property disposals arises.

Just be aware that if you do decide to complete your own online capital gains tax disposal return, late-filing penalties apply if you fail to file within the new 60-day timeframe.

It also needs to be reported on the relevant self-assessment tax return as it goes towards your final capital gains tax liability on all asset disposals made in a tax year.

We can assist you with this process and help report any disposal on your behalf.