Page 14 - Chartered ONE – Issue 26
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LSCA BUSINESS
   Capital Gains Tax on UK Property
Fundamental changes have been made to the payment of capital gains tax
on the disposal of UK residential property. Andrew Lloyd, Tax Partner at RSM and a Society Past President, sets out the impact on property owners and their advisors.
rom 6 April 2020, UK resident individuals, trusts and personal representatives have 30 days
after the date of completion to report and pay capital gains tax (CGT) on taxable UK residential property disposals.
There are several hoops to jump through before the tax can be reported and paid as HMRC insist taxpayers use the new online “Capital Gains Tax on UK Property” account. This is a completely separate system to a personal tax or self-assessment account and must be set up in good time.
People with tax to pay must create a Government Gateway login and verify their identity online before they can set up a new CGT account. HMRC haven’t yet explained how taxpayers who don’t have access to a computer are expected to report and pay CGT.
Under this new system, tax advisors who would usually deal with HMRC on behalf
of their clients need to be authorised to access the Capital Gains Tax on UK Property account, despite already having access to the client’s self-assessment account. Each step in this new system seems to chip away at the already limited time which a taxpayer has to fulfil their obligations to HMRC.
You would expect the process to be simpler once the account has been successfully created for the first time. Not so. HMRC’s guidance has been updated to state that only the first return for UK property sales
or disposals made in a tax year can be submitted online. For any amendments
to an existing return or completion of any further CGT returns for the tax year, it will be necessary to contact HMRC.
All disposals must also be reported on the annual self-assessment tax return if one is required. At this point the rate of CGT will
   be based on the actual income/gains for the year, and late payment interest will be charged if the payment on account was insufficient.
WHO WILL BE AFFECTED?
The disposals that are most likely to be affected are:
• Sales of second homes, holiday homes or rental properties.
• Disposals of property previously let out or with periods of absence.
• Disposals of property partly used for
business or an inherited property.
• Disposals of property with extensive grounds or gardens that exceed 0.5
hectares.
The other changes being made to the taxation of UK residential property, including a reduction in the final period of ownership that is covered by the Private
“People with tax to pay must create a Government Gateway login and verify their identity online before they can set up a new CGT account.”
Residence Relief and the restrictions to Letting Relief, mean that more individuals will now have a CGT liability when selling a UK residential property. With only 30 days from the date of completion to report and pay the CGT, it is important to prepare for this in advance and ensure that all opportunities have been considered and costs budgeted for, and hence the return can be filed on time.
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