October is often the time of year when the organised think about preparing information for their self-assessment tax return to be filed on 31 January the following year. For 31 January 2021, this would be for the tax year from April 2019 to April 2020. Accordingly, details relating to a property disposal in September 2020 could easily be set to one side until Autumn 2021 or even January 2022.
However, that would be to miss a fundamental change in the law for real property disposals by UK residents made on or after 6 April 2020. Such disposals must now be reported to HMRC within 30 days of completion (and the CGT paid in that window).
Of course, in Spring 2020, many people were distracted by lockdown and other personal matters, and so HMRC adopted a "light touch approach". It said that disposals between 6 April 2020 and 1 July 2020 could be reported by 31 July 2020 without incurring a late filing penalty. Nevertheless, any CGT payable remained due within 30 days of completion, and late payment of this would incur interest. Fortunately, HMRC late payment rates are low at the moment, and it is understood that if there are financial pressures as a result of lockdown, HMRC should be sympathetic.
HMRC is encouraging the use of the Government Gateway for filing these CGT returns (paper returns are available but only on request). This is a move towards real time tax filings. The aim of this is that HMRC will have access to information around liability and quantum virtually simultaneously with the taxable event. As someone once remarked, the tax authorities will know about a mistake in your tax compliance before you do!
Increasingly, we are moving from a tax compliance regime where, as taxpayers, we push information to HMRC, to one where HMRC pulls information from the taxpayer.
We are not there quite yet with CGT but, nevertheless, it is a cultural and financial shock to bring forward the payment date by as much as 20 months. For example, historically a sale on 1 May 2020 (tax year 2020/21) would have been reported and paid by 31 January 2022, whereas now we are looking at 31 May 2020.
If you sold your property after 6 April 2020 you must report and pay Capital Gains Tax within 30 days of selling property in the UK. If you're a non-resident and you've sold property or land in the UK, tell HM Revenue and Customs (HMRC) within 30 days, even if you have no tax to pay.