Landlords who have sold a property recently and made a capital gain have until 31st July to report the transaction for capital gains tax (CGT) purposes or face a fine, the UK’s leading accountancy body has warned.
Under new rules, which many landlords may not realise now exist, capital gains on residential property disposals are now time limited, says the Institute of Chartered Accountants in England and Wales (ICAEW).
The rules requires that landlords report and pay CGT on disposals within 30 days of any exchange taking place on or after 6 April 2020.
The ICAEW asked the government to delay the introduction of this measure because many landlords are unware and doubts over whether the online system has been adequately tested, but the government decided to proceed regardless.
But following the COVID pandemic Ministers extended the reporting deadline and now no late filing penalty will be charged for transactions completed between 6 April 2020 and 1 July 2020 as long as they are reported by 31 July 2020.
But overall, the requirement to pay any CGT due within 30 days of completion was not deferred and interest will be charged by HMRC on any tax not paid within 30 days of completion.
UK residents are required to report gains on UK residential property only where tax is due, while non-UK residents must report gains regardless.
The ICAEW is also urging landlords and their accountants to prepare early – HMRC is making it increasingly difficult to report only using paper only and it takes time to set up a government gateway payment account.