The payment window for capital gains tax (CGT) on the sale of second homes and buy-to-let residential properties is being cut to 30 days
HMRC is trialling a digital payment process and is asking tax advisers and their clients to test the system before it goes live this April. This will allow people to report and pay their CGT property disposal liability online.
Tax agents and their clients can sign up to trial the new Report and pay CGT on UK property service, and HMRC says it will use the feedback to finetune the service to ‘help us to make it as easy as possible for customers to use’.
HMRC is looking for tax agents representing UK and non-UK resident individuals or trusts who are likely to need to report CGT on UK property for a client.
From 6 April 2020, CGT must be reported and paid to HMRC within 30 days of completion of the disposal of the property. Non-UK residents who currently report property disposals within 30 days can no longer defer payment.
Note that the move to the 30-day window will change tax reporting requirements for taxpayers outside of self assessment.
In the trial notice in the last HMRC Agent Briefing, HMRC said: ‘This will mean that if they have no other self assessment criteria, they will no longer need to register for self assessment to notify and pay for a “one-off” property disposal to report the gain.’
However, any taxpayers already reporting under self assessment will need to include the gain on their returns. Self assessment returns will be amended to reflect this for the relevant tax year.
Late filing and late payment penalties will apply, and consequent interest will also continue to be charged.
The trial is taking place up until 5 April 2020. It will take the tax agent and their client between 30 minutes and an hour in total to test the system.
From 6 April 2020, if a client gives authorisation, accountants will be able to access their account to settle CGT bills for property sold from 6 April 2020.
John Bunker, chair of CIOT’s private client UK committee, said: ‘Rather than thinking about an annual compliance process, property owners need to have their records up to date in advance of the sale so that the 30-day deadline can be met and penalty charges avoided.
‘Make sure that full property details are all readily to hand including the date when the property was acquired, the acquisition cost and details of any improvements made over the period of ownership. In some cases, professional valuations may be needed.’
How to join the trial
Email email@example.com to join the trial, and include your name and a contact number so HMRC can set up a specific time for the trial.