In 2020, a new system was introduced for paying the capital gains tax (CGT) due from selling a UK residential property. However, many estate agents and solicitors are still unaware of this new requirement. Our article will run through everything you need to do to stay in line with the system.
Where Do You Need To Report Your Gains?
When selling a home, you will need to report your gain to HMRC on:
- The UK Property Account (this is typically online) within 60 days of completing the property sale. The CGT will also need to be paid by the same date.
- Your self-assessment (SA) tax return by the 31st of January after the tax year in which the sale was made.
In some instances, you may not have to report your transaction within the 60-day period; however, you may still need to report the loss on your SA tax return. This applies if:
- you make a loss when selling (or giving away) the property;
- or the gain is covered by CGT exemptions (such as because you lived in the property as your main home).
If you have not reported your gain via the UK Property Account by the time your annual SA return is due, you must complete the UK Property Account first. HMRC systems will not allow you to complete this online after your SA return has been accepted, which means it will have to be done in paper format. There will also be penalties for submitting a UK Property Account late.
Our team can help you calculate the tax due when you sell a property; please contact us promptly after the sale to avoid penalties on late returns or payments.