Understanding HMRC’s 60-Day Capital Gains Tax Reporting Rule.

Selling a residential property in the UK?

You may already know about Capital Gains Tax (CGT), but did you know there’s a strict 60-day reporting rule introduced by HMRC in April 2020? Missing this deadline can lead to hefty penalties and unnecessary stress. With proper planning and expert guidance, you can navigate this requirement with ease. Here’s everything you need to know.

Who Needs to Report?

The 60-day CGT reporting rule applies to UK residents selling residential properties that aren’t their main home. This includes:

• Second Homes: Selling a second home or a rental property.
• Joint Property Owners: Each owner must report their share of the gain separately.
• Trustees: Disposing of trust-owned property.
• Personal Representatives: Managing the sale of property from a deceased estate.

Non-UK residents also need to report the sale of both residential and non-residential properties in the UK, regardless of whether there is a gain or a loss, even if no tax is due. Example: If you’re selling a holiday home or a rental property, you’ll need to report and pay any CGT due within 60 days of completing the sale.

When Don’t You Need to Report?

Not every property sale requires CGT reporting. You won’t need to report if:

• The property is sold at a loss. However, non-UK residents will still need to report regardless of the loss. Reporting a loss also allows you to carry it forward to offset future CGT profits.
• The gain is fully covered by your annual exemption or reliefs like Principal Private Residence (PPR) relief.
• The property transfer occurs between spouses or civil partners.

These exemptions are crucial, as they can save you time and effort during the reporting process.

What Types of Property Are Affected?

This rule applies to various types of UK residential properties, such as:

• Rental properties.
• Furnished holiday lettings.
• Properties never lived in or only partially used as a primary residence.

Commercial properties, overseas properties, and properties sold at a loss are exempt from the 60-day reporting requirement. Tip: Before proceeding with a sale, consult a tax advisor to determine whether the 60-day rule applies to your property.

How to report a sale

Navigating HMRC’s ‘Capital Gains Tax on UK Property’ service may seem daunting, but it’s manageable when broken down into steps:

1. Create a Government Gateway Account: If you don’t already have one, set it up online.
2. Register for a CGT Property Account: This account allows you to report your property disposal and calculate the estimated tax due.
3. Seek Expert Assistance: If the process feels overwhelming, consider working with a tax advisor who can handle the reporting on your behalf.

Having professional guidance can save you time and help you avoid costly mistakes.

Penalties for late reporting

Missing the 60-day reporting deadline can result in significant penalties:

• £100 Initial Penalty: Applied immediately after the deadline.
• If Over 6 Months Late: 5% of the CGT due, or £300 (whichever is greater).
• If Over 12 Months Late: An additional 5% of the CGT due, or £300 (whichever is greater).

Interest will also accrue on late payments, so prompt reporting is essential.

Why compliance matters

The 60-day rule ensures HMRC receives timely information and payment of CGT liabilities. Non-compliance can result in not only penalties but also increased scrutiny of your financial affairs, such as audits or closer monitoring of future transactions. To avoid these pitfalls, working with a trusted advisor is invaluable. Kudos Accounting can help you meet deadlines, minimise tax liabilities, and ensure a smooth reporting process.

Take the stress out of reporting

Selling a property is a major decision, and understanding the tax implications is key to avoiding unnecessary complications. Whether it’s your first sale or part of a larger portfolio, expert advice can make all the difference.

For tailored support, visit www.kudosaccounting.co.uk, ring us on +44 20 3870 5385, or email us at hello@kudosaccounting.co.uk to speak to one of our advisors today.

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