Capital Gains Tax on UK property

Written by EKWilliams Team

i

Covid 19 | Latest

January 8, 2021

HMRC issues £1.3m in late filing penalties:

The rule was changed to ensure that disposals were declared within a 30-day deadline from the 6th April 2020. Anybody selling a second home should declare and pay CGT due by using the new CGT on UK Property Account within 30 days of completion or be penalised. 

Tell HMRC about Capital Gains Tax on UK property or land if you’re non-resident

Find out if you need to pay Capital Gains Tax if you’re not resident in the UK and are making direct or indirect disposals of UK property or land.

You need to submit a non-resident Capital Gains Tax return if you’ve sold or disposed of UK property or land up to 5 April 2020.

From 6 April 2020 you need to report and pay your non-resident Capital Gains Tax using the Capital Gains Tax on UK property service if you’ve sold or disposed of:

  • residential UK property or land (land for these purposes also includes any buildings on the land)
  • non-residential UK property or land
  • mixed use UK property or land
  • rights to assets that derive at least 75% of their value from UK land (indirect disposals)

A ‘mixed use’ property is one that has both residential and non-residential elements. For example, a flat connected to a shop, doctor’s surgery or office.

You must report and pay non-resident Capital Gains Tax if you’re a:

  • non-resident individual 
  • personal representative of a non-resident who has died 
  • non-resident who’s in a partnership 
  • non-resident landlord 
  • non-resident trustee 
  • UK resident meeting split year conditions and the disposal is made in the overseas part of the tax year

You must report and pay within 30 days of completion of conveyance.

For example, if you complete the disposal on 1 July you must report and pay your Capital Gains Tax by 31 July.

If you do not report and pay before the deadline you’ll get a late filing penalty and may be charged interest if you do not do this by the 30-day deadline. 

Extension to non-resident Capital Gains Tax

From 6 April 2019, non-resident Capital Gains Tax covers:

Non-resident companies

From 6 April 2019, Corporation Tax rather than Capital Gains Tax will be charged on gains from UK property or land for all non-resident companies. This includes:

  • collective investment vehicles that are deemed companies (provided they have not elected for transparent or exempt treatment)
  • life assurance companies

If you do not already submit a Corporation Tax return, you must register a non-resident company for Corporation Tax.

Deadline for reporting the disposal and payment

You must report the disposal online using the UK property service by the 30-day deadline, even if:

  • you’ve no tax to pay
  • you’ve made a loss
  • you’re registered for Self Assessment

If a property was jointly owned, each owner must tell HMRC about their own gain or loss. Special rules apply if you give a UK property to your spouse, your civil partner, or to charity.

You also have to pay any non-resident Capital Gains Tax due within the same 30-day period.

Penalties

You have 30 days from the date of conveyance to report your disposal and pay any tax due. You’ll get a late filing penalty and be charged interest if you do not do this by the 30-day deadline.

If you miss the deadline by:

  • up to 6 months, you will get a penalty of £100
  • more than 6 months, a further penalty of £300 or 5% of any tax due, whichever is greater
  • more than 12 months, a further penalty of £300 or 5% of any tax due, whichever is greater

If you have to pay any non-resident Capital Gains Tax within the same 30-day period, late payment penalties and interest may also be due if you miss the deadline.

If any non-resident Capital Gains Tax remains unpaid after 31 January after the end of the tax year of the disposal, a late payment penalty of 5% of the tax outstanding will be charged.

Call a member of the team today to find out more on 01942 816 512.

Source: GOV.UK