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New CGT filing deadline for residential property disposals

Posted on 27 April 2020

If you make a gain on the sale of a residential property, which usually means a second home or a buy to let since your main home will generally be tax-free, you used to report the gain in your tax return and pay the tax by the usual 31st January deadline. That could be up to 21 months after the sale. Now you have to report the gain and pay the tax within 30 days of completion. There will be penalties and interest for late payers. You still also have to report the gain in your tax return.

You need to report the gain in an online form and, unless you use a tax agent, you'll need to register with the Government Gateway. That can take time so don't leave it to the last minute. One problem is that the applicable Capital Gains Tax (CGT) rate (18% or 28%), will depend on your income for that tax year. If the property sale is early in the tax year, you may not know what your income will be and hence the relevant CGT rate. You should make a reasonable estimate and if it turns out you underpaid the CGT, you can pay the balance when you file your tax return.

You will also need to calculate the gain before reporting it. You should do most of the preparation before a sale, including tracking down the purchase price, the SDLT you paid, and any other allowable capital improvement costs such as an extension. If you gift rather than sell the property, the new rules still apply based on the market value at the date of the gift. That means you'll also need a professional valuation as well as cash from other sources so that you can compute and pay the tax within the 30 day deadline.

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