New 30-day CGT rules on residential property sales

27 May 2020

white town house

UK owners of residential properties risk being caught out by new 30-day reporting and payment rules for capital gains tax (CGT) that came into force on 6 April this year.

The rule applies when a UK resident sells a UK residential property and a CGT liability arises and means that disposals must be reported to HMRC and a ‘payment on account’ of the tax paid within just 30 days of completion of the transaction.

As a consequence, information on CGT base costs and records of any capital improvement expenditure need to be pulled together much more quickly than previously. Estimates can be used, but underpaid tax will attract interest (and potentially a penalty if you get it very wrong).

Where no CGT is due, the new rules will not apply. The following will be exempt:

  • Where a legally binding contract for sale was made before 6 April 2020
  • The criteria for full Principal Private Residence (PPR) relief are met
  • The sale or disposal was to a spouse or civil partner
  • The gains (including any other chargeable residential property gains in the same tax year) are within the tax-free CGT annual exemption
  • The property was sold at a loss
  • The property is outside the UK.

With the online reporting facility now open, taxpayers are advised that they will require the following information to report a disposal:

  • Property address and postcode
  • Date of acquisition of the property
  • Date of exchanging contracts for disposal of the property
  • Completion date of the transaction
  • Purchase price of the property when acquired, or base cost
  • Price of the property when sold/disposed
  • Costs of buying, selling or making improvements to the property
  • Details of any tax reliefs, allowances or exemptions to which entitled.

A Government Gateway registration is also required to be able to set up a reporting account.

Martyn Dobinson, Partner, Saffery, and a member of the firm’s Landed Estates and Rural Business Group, said:

“Similar rules have applied to non-UK residents for a few years, but the rules have now been widened to catch UK residents too. HMRC has announced a soft-landing period of three months, during which they will not issue late filing penalties, although interest on overdue payments will accrue. Beyond the end of July, statutory late filing and payment penalties will be enforced.”