Capital Gains Tax review: Recommendations for UK property tax return

June 22nd, 2021

Due to the impact of property tax holidays across the UK, property buyers continue to fuel the post-Covid economy. Nevertheless, many people have limited awareness or understanding of Capital Gains Tax. Knowledge of the rules is particularly important when selling a buy-to-let property or a second home.

The Office of Tax Simplification (OCT) has published the second report of their review of Capital Gains Tax (CGT). It sets out what could be done by HMRC to raise awareness among taxpayers to help them meet their CGT 30-day reporting and paying obligations.

Capital Gains Tax (CGT) is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that is increased in value. Since 6 April 2020, UK residents, individuals, trustees, or personal representatives with a gain arising on the disposal of UK residential property (on which there is Capital Gains Tax to be paid) must report it via the new UK Property tax return within 30 days of completion.

The latest data from HMRC suggests as many as one-third of CGT returns were filed outside of 30 days and in the last six months of 2020, late filing penalties totalling £1,311,300 were issued since the 30-day window was introduced.

Recommendation three of the report proposes the UK Government adopts one of the two changes to improve the system:

  1. Extend the reporting and payment deadline from 30 to 60 days, to give taxpayers more time to fulfil their tax obligations. The OTS considers that 30 days is a challenging deadline for many taxpayers, for whom disposing of property is an infrequent experience.
  2. Mandate property professionals such as estate agents, conveyancers or auctioneers to distribute an HMRC-approved standard information pack to customers whenever a residential property is placed onto the market or instructions were given to a conveyancer. This could help taxpayers proactively plan and gather required information in advance of the sale and therefore providing plenty of time in advance of the 30-day period starting.

The OCT acknowledges that careful consideration would need to be given to whether information should be provided by estate agents, conveyancers, or both. The recommendations will now be considered by the UK Government.

Read the policy paper:

I hope this post is useful to you. Please do let me know if you have anything to add, and I will gladly consider it and add to the article if it helps my readers and don’t forget, if you need further advice/assistance or would like to reach out you can find my contact details below. 

Josephine – Your Trusted London Property Partner

Tel    : +44 (0) 7491 430055

email: josephine@josephinedayan.com