After a six-month delay, HMRC has confirmed that declaring a capital gain on the disposal of a UK residential property under Self Assessment does not remove the requirement to file a 60-day property disposal return.
- Since 6 April 2020, subject to some exceptions, such as where there is no tax due, individuals disposing of residential property have had to file an online property disposal return and pay the capital gains tax due within 60 days.
- Prior to that date the deadline was 30 days.
There has been some confusion as to how these rules interact with the requirement to declare capital gains under Self Assessment (SA), and HMRC had previously advised that the online property disposal return must be filed before the SA return. Unfortunately for disposals during 2020-21 many taxpayers have not done this and hoped that they would meet their filing obligations by simply reporting their gain under SA.
After a six-month delay, HMRC has finally clarified the position and confirmed that, where an online return has not been filed but the gain has been declared under Self Assessment, a late property disposal return must still be filed and this must be done by way of a paper form. Currently the paper form is not available online and can only be obtained by calling the HMRC helpline.
- Since the 60-day return will be late, penalties and interest will be due, though interest would have stopped accruing when the CGT due was paid under SA. Taxpayers who are in this position should take steps to file the paper return as soon as possible to prevent further penalty charges.
- The only exception is where the gain is declared under SA first because the SA return is filed before the 60-day deadline. In this case no online property disposal return is required.
The professional bodies have requested that HMRC do not charge late filing penalties for the first six months in relevant cases since it has taken them so long to clarify the position.
Useful guides on this topic
CGT: Payment of tax
When is Capital Gains Tax (CGT) due? Can I pay in instalments? What are the penalties if I pay late?
CGT: Reporting obligations
How do you report your capital gains? What return do you use?
Adviser's Tax Penalty Planner
A guide to the key direct and indirect tax penalty regimes for returns and payments, excluding VAT.
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