NEW CGT REGIME FOR RESIDENTIAL PROPERTY DISPOSALS - PART 1 OF 3
Omar Aswat - Chartered Tax Advisor
Founder: ASWATAX / ASWATGlobal. I provide bespoke tax advice and creative solutions for business owners and property landlords! ?? I can also help you set up in the UAE and KSA.
PART 1
OVERVIEW
The new 60 day reporting and payment deadline has been in play since 6 April 2020 for disposals of UK residential land by both UK and non-UK resident individuals (previously only for non-UK residents).
Those that are within the scope of CGT, being individuals, personal representatives, trustees and partners within a partnership are subject to these rules. Companies are not as they are taxed under CT.
So the general principle here is that from 6 April 2020 onwards, a UK resident who directly disposes of an interest in UK land on which a residential gain accrues will be subject to this new regime.
Reflect on the above: ‘on which a residential gain accrues’.
This is interesting as well as a bit of a mess because any proportion of the gain that relates to non-residential property is reportable under normal self assessment rules. This may be the case for example where an individual is selling his/her shop with say two flats above it.
How does one decide values for each element? Make a just and reasonable apportionment.
A NGNL disposal (transfers between spouses/civil partners) or a disposal made by a charity is excluded from this regime.
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REPORTING REQUIREMENTS
Generally, where the taxpayer and the disposal of UK land are within the scope of the capital gains tax UK property disposals compliance regime, the taxpayer has 60 days following the date of completion of the disposal (not the date of exchange, which is the usual operative date for capital gains tax) to submit a capital gains tax UK property disposals return to HMRC.
There are a few exceptions to this rule which are broken down below:
A disposal giving rise to a loss is not reportable. However, please ensure that you disclose this on your self-assessment tax return in order to quantify and realise the loss for future relief.
A gain covered by capital losses brought forward, the annual exempt amount or any CGT reliefs such as PPR relief are also not reportable.
No reporting requirement if there is a timing difference, say the self-assessment tax return ended up being due before the end of the 60 day deadline. This can happen usually due to the ‘exchange’ and ‘completion’ differences.
And few others….
Hope you have found this beneficial. Should you have any queries, please do not hesitate to contact me! ??