One of the biggest tax changes to emerge from October’s Autumn Budget 2021 was actually left out of Chancellor Rishi Sunak’s speech itself and it surrounded capital gains reporting.
The time limit to report and pay capital gains tax on the disposal of UK residential property doubled from 30 to 60 days with immediate effect.
This is actually quite significant for buy-to-let landlords, second homeowners, and those who fell into letting out additional property.
The previous regime allowed just 30 days for compliance, and only a few taxpayers actually knew about it.
The initial requirement was ambitious to say the least, especially when you factor in the complete lack of publicity around it.
Why did the capital gains tax reporting deadline extend?
An Office for Tax Simplification (OTS) report found many taxpayers only became aware of their obligation after disposing of a rental property.
According to the report, published in May 2021, as many as one in three of the initial UK property tax returns were filed later than 30 days.
The OTS claimed 150,000 people were left with insufficient time to consider if they had made a gain, and 85,000 people had even less time to report it.
Prior to Autumn Budget 2021, the OTS called on the Treasury to extend the reporting and payment deadline for the UK Property tax return to 60 days.
Their wish was the Treasury’s command.
Do the rules apply just to UK property?
The rules apply to completions made on or after 27 October 2021. The 30-day deadline for completions before this date has already passed.
The extension applies to non-UK residents disposing of any type of property in the UK, whether directly or indirectly owned.
When mixed-use property is disposed of, the 60-day payment window will apply only to the residential element of the property gain.
How to submit a UK property tax return
Firstly, you will need to set up a capital gains tax on UK property account in order to report and pay any tax.
This is separate from your personal tax account.
If you’re happy to authorise us to handle your capital gains tax return on UK property, you will need to share your 15-digit reference number with us.
Along with your postcode, we use these details to login to your account and generate a ‘digital handshake’ link, which you will receive via email.
Once you complete this process, usually within 7-14 days, we can take it from there and manage your property account.
It will, however, be your responsibility to login to your UK property account to make payment on account to HMRC.
We can manage your account
Our personal tax planning service includes all aspects of reporting and paying capital gains tax after you dispose of an asset.
In terms of your obligations, the clock is ticking from the moment you complete the sale of an additional residential property.
We can talk you through the process and act on your behalf if you wish. Email us at email@example.com or call 01363 773191 to find out more.