Homes under the HMRC hammer? 30-day reporting is catching sellers out

Pip Elms, Senior Manager

By Pip Elms, FCA, BA (Hons), Senior Manager

Since 6th April 2020 disposals of residential property must be reported to HMRC and the capital gains tax (CGT) due paid within 30days of the date of completion.  Where there is no CGT due, no 30day return is required.  If the property has been your main residence for the whole period of ownership there should be no requirement to report the disposal for CGT purposes.

This change in the reporting of residential disposals has caught out many sellers who have been unaware of the change or have found that 30days is not long enough to get together the relevant information to report the gain.  Even if a seller already files Self-Assessment returns, they are required to file a 30day return as well as report the disposal within their year-end return.

As it can take some time to calculate the CGT position and to set up a “Capital Gains Tax on UK Property Account” we would recommend speaking to an accountant as soon as you are considering disposing of a residential property.

If multiple properties are disposed of in the same tax year, then a return and payment must be made for each disposal.  It is important to consider any disposals you may be making and if this includes residential property – for instance the sale of a farm which includes land, buildings and a farmhouse or cottage may require the disposal of the farmhouse/cottage reporting within 30days and the remainder of the property disposals reporting by a later date.

If disclosure is not made to HMRC within 30days of completion, late filing penalties will be charged. The penalty can reach £1,600 per return, if filed more than 12 months late. HMRC will also charge interest if the tax is not paid on time.