Capital Gains Tax on UK Property – How to report to HMRC?

Capital Gains Tax on UK Property – How to report to HMRC?

October 03, 2020

HMRC has introduced a new Capital Gain Tax reporting and payment regime from 6th April 2020. This is applicable for both UK resident and Non-UK residents. In this article we have covered the methods that you need to use to report and pay capital gains tax.

You can report and pay Capital Gains Tax due:

1. Using the new HMRC service for capital gains tax on UK property. You must report and pay within 30 days from the date of completion of sale.

2. Pay straight away by using the Real Time CGT Services.

3. By filling in your Self-Assessment Tax return annually.

New Rules on CGT effective from 6th April 2020

Normally, if you sold a property in the tax year 2019-20 then you can pay the CGT on gains made via your self-assessment on or before 31st January 2021.

However, according to HMRC’s new guidelines, those who are buy-to-let landlords and second homeowners, if they sale properties, which are not their listed principal home residence, the CGT on gains arising from such sales must be reported and paid within 30 days from the completion date of the sale.

If you miss the deadline to report and pay the capital gains tax due then you may have to pay interest and penalty.

However, this is not applicable if you sold your main private residential property, which was used as your main residence. For this Private Residence relief is available for you.

If you sold your property before 6th April 2020 then pay CGT in your next Self-assessment tax return.

What if you are non-UK resident?

If you are a non-UK resided and sold property in the UK before 6th April 2020 then you need to submit a non-resident Capital Gains Tax return.

From 6th April 2020 according to the new 30 days rule you need to report and pay Capital Gains Tax using the HMRC Capital Gains Tax on UK property service.

Real Time CGT Services

In case you are a UK resident and have gains but not from selling UK residential property then you can report and pay using the Real Time services.

For this you need to create Government Gateway User ID and Password unless you already have the access.

The deadline to report and pay is 31st January of next year from the tax yearend (from 6th April to 5th April).

Before you proceed to report, make sure you have the working of how the Capital Gains and Tax have been calculated. You need PDF or JPG file of the working to upload during the process.

Once your reporting process is completed, HMRC will issue payment reference (via. email or letter). You must make the payment only after you have received the payment reference from HMRC.

Report and Pay using Self-assessment Tax Return

You can report and pay Capital Gains Tax by filling in your self-assessment return.

However, in case you have gains from sale of UK residential property that you sold after 6th April 2020, then you must have reported and paid tax, if any within 30 days using the new HMRC service.

Nevertheless, you still need to report the gains in your self-assessment tax return.

If you are filing self-assessment for the first time then you need to register for it by 5th October after the tax yearend.

The deadline to file and pay via. Self-assessment is 31st January (31st October for paper filing).

How much Capital Gains Tax you pay depends on your income tax rate, so it is always better to take expert advice from an accountant or tax advisor. We at Doshi & Co. have ample experience of dealing in Property Accounting Services and overall Tax Services. We are working with Real Estate Accounting Firms as well. We always make it certain that you report and pay the correct legal minimum tax on time.