CAPITAL GAINS TAX 101: PROPERTY

IMPORTANT REMINDER: CAPITAL GAINS TAX (CGT) 60 DAY FORMS

Have you sold, or are you planning on selling, a residential property?

If so, you may need to submit a CGT return and pay any tax due 60 days after completion.

And now, following submission of 2021/22 tax returns, HMRC are looking at whether 60 day CGT forms have been filed. Consequently, we’re seeing them issuing penalties for non-submission.

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What are the important dates?

Taxpayers have 60 days from the date of completion to submit the CGT return to HMRC and make the CGT payment. The date of exchange of contracts is relevant for the Self Assessment tax return, not the CGT return.

What happens if I miss the 60 day window?

There can be late filing penalties charged along with interest on unpaid tax. Please talk to us before you sell, and we can advise if a CGT return’s due.

What’s a UK CGT property account?

Before you can submit a CGT return, you’ll need to set up a CGT property account. You can create an account here and then click on the green ‘Start’ button. You’ll need to do this before we can prepare and submit your return for you.

If you’re a non-UK resident with a UK property disposal, you’ll need to request a paper CGT return form from HMRC.

What exemptions are available?

You have a CGT annual exemption of £12,300 to offset against your gain if this hasn’t been utilised on other capital gains throughout the year.

This is reducing to £6,000 in 2023/24 and £3,000 in 2024/25 so planning for any capital gains will be important. 

Private Residence Relief may be available if the property was your main residence at any given point during the ownership of the property. This can reduce your tax bill significantly.

So again, please do talk to us about your planned disposal and we can consider any reliefs that are available to you.

Why’s capital expenditure important?

There’s a separate box for capital expenditure when completing a CGT return. This includes any costs associated with improving the value of the property. An example of this would be an extension to the property that’s still in place when you sell the property. This can also reduce your CGT.